The revision in the LNG agreement with Qatar has helped bring down the price of importing natural gas to less than $5 per million British Thermal Units (mmBtu) from $12, India’s Oil Minister Dharmendra Pradhan said on Monday.
In late December last year, India got Qatar to agree to slashing gas price by half to match a slump in global energy rates, helping the nation save billions of dollars, as well as get a waiver from the INR120bn ($1.81bn) penalty for buying 38% lower than agreed quantities of gas.
India, which got $15bn of benefits during first 11 years of the term-contract with Qatar beginning 2003, by way of enjoying low gas prices when world energy rates were rising, is currently paying less than $5 per mmBtu for 7.5mn tonnes a year of LNG it buys from Qatar’s RasGas.
“Earlier the prices during 2015 were in excess of $12 per mmBtu. The current price applicable under the contract works out to less than $5 per mmBtu based on prevailing crude [oil] prices,” Pradhan said in a written reply to a question in the Indian parliament.
This revised deal, which came into effect from January 1, has led to making LNG cheaper for the end consumers in India, he said.
The revised formula will base the price on a three-month average figure of Brent crude oil, replacing a five-year average of a basket of crude imported by Japan, with a rider that PLL buys an additional 1mn tonnes of LNG annually.
Further, Petronet LNG Ltd ― the firm that imported LNG from RasGas ― has executed agreement for additional supply of 1mn tonnes per annum of LNG for about 12 years with effect from January 1, 2016 at the prevailing market prices, Pradhan said.
“RasGas and Petronet LNG Ltd have agreed to reschedule the LNG quantity not taken [bought] by Petronet LNG Ltd during 2015 to a future period and RasGas has agreed to waive the ‘take or pay’ liability under the contract for the year 2015,” he said.
Petronet, a joint venture of state-owned Indian Oil Corp, GAIL India Ltd, Oil and Natural Gas Corp (ONGC) and Bharat Petroleum Corp Ltd (BPCL), had started importing LNG from Qatar in 2004.
