NEW DELHI: Having successfully persuaded Qatar and Australia to lower gas price, India now wants the LNG rate it has contracted from the US and Russia reviewed to reflect current market realities.
“We have successfully renegotiated, along with Petronet LNG, two long-term contracts. We are now working on third and fourth contracts,” said GAIL chairman and managing director B C Tripathi at a Ficci conference here on Wednesday.
While Tripathi did not mention the LNG import contracts, the reference is to last month’s in-principle agreement with Exxon Mobil Corp for a cut in price of 1.44 million tonnes a year liquefied natural gas to be imported from Australia’s Gorgon project.
In 2015, India had renegotiated price of the long-term deal to import 7.5 million tonnes per year of LNG from Qatar, helping save Rs 8,000 crore.“This is how market structure has changed,” Tripathi said. “The point which I am trying to drive is that we are moving from a supply constraint market to a supply surplus market.”
Tripathi said market structure has changed from a time when Indian firms struggled to get an appointment with LNG exporters to gas suppliers now running after the world’s fastest growing energy market.
This has primarily happened because availability has increased and prices have slumped in global energy markets.
GAIL, India’s biggest gas distributor, wants to renegotiate the 2011 sales and purchase agreement with Cheniere Energy for import of 3.5 million tonnes of LNG annually, with yearly fixed fees of $548 million and a term of 20 years. The state-owned firm had agreed to pay Cheniere a price of $3 per million British thermal unit (mBtu) plus 115 per cent prevailing Henry Hub natural gas price.
Officials said GAIL wants the fixed portion to be lowered to bring down landed cost of LNG to $7-8 per mBtu as against the present $9.7.