India may seek renegotiation of LNG price from Qatar: Dharmendra Pradhan

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Published: January 23, 2020 6:33:23 PM

"Energy Minister of Qatar is coming for bilateral discussion (to India) at the end of the month. We will discuss all the aspects," Pradhan said.

Dharmendra Pradhan, LNG import contract, Qatar, Oil Minister, LNG from Qatar, ExxonMobil Corp, LNG import terminalRefusing to be drawn into giving a direct reply on renegotiating the contract with Qatar, Pradhan said India is in discussions with Qatar for importing more LNG to meet the country’s rising energy needs. (PTI photo)

India may seek to reopen the pricing of its long-term LNG import contract with Qatar to reflect falling rates of the spot or current market, Oil Minister Dharmendra Pradhan said on Thursday. “Energy Minister of Qatar is coming for bilateral discussion (to India) at the end of the month. We will discuss all the aspects,” Pradhan told reporters here.

He was asked if the government is looking at renegotiating liquefied natural gas (LNG) contracts in view of the fall in prices of the fuel available in spot or current market. India imports 8.5 million tonnes per annum of LNG from Qatar under two long-term contracts and has tied up 5.8 million tonnes a year supplies from the US. It also has a 2.5 million tonnes import contract with Gazprom of Russia and a 1.44 million tonnes deal with the Gorgon project of Australia. While long-term LNG from Qatar comes for USD 8.5-9 per million British thermal unit, the same gas is available in the spot market for less than half the price.

Refusing to be drawn into giving a direct reply on renegotiating the contract with Qatar, Pradhan said India is in discussions with Qatar for importing more LNG to meet the country’s rising energy needs.
India has in the past used its status as Asia’s third-largest LNG buyer to renegotiate deals with Qatar, Australia, and Russia. In 2015, it renegotiated the price of the long-term deal to import 7.5 million tonnes per year of LNG from Qatar, helping in saving Rs 8,000 crore.

In 2017, it got ExxonMobil Corp to lower the price of Gorgon LNG and a year later convinced Gazprom to lower rates also. Sources, however, said the price of LNG from these contracts was still significantly higher than spot prices and if the trend continues, users may seek a review.

Prabhat Singh, managing director of Petronet LNG Ltd, the firm which has long-term LNG import contracts with Qatar and Australia, had on August 7, 2019, stated that price sensitivities of consumers will have to be respected.

Earlier, speaking at an industry event, Pradhan said as much as Rs 4 lakh crore is likely to be invested in the natural gas sector in the country to boost usage of the environment-friendly fuel. This investment will be in the expansion of city gas network, laying pipelines, setting up LNG import facilities and natural gas exploration, he said.

LNG import terminal capacity in the country is likely to grow from 38.8 million tonnes per annum presently to 52.5 million tonnes in the next 3-4 years with new facilities coming up at Kakinada in Andhra Pradesh, Dhamra in Odisha, Jaigarh in Maharashtra and Chhara and Jafrabad terminals in Gujarat.

Also, 14,788 km of pipeline is being added to the existing 16,788-km network to take the fuel to all corners of the country, he said adding that the city gas distribution network is being expanded to over 400 districts.

The investment will help raise the share of natural gas in the country’s overall energy mix to 15 per cent by 2030 from the current 6.2 per cent.

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