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India may renegotiate LNG import contracts at appropriate time, says Dharmendra Pradhan.


Date: 27-08-2019
Subject: India may renegotiate LNG import contracts at appropriate time, says Dharmendra Pradhan
India may look at renegotiating pricing of its long-term LNG import contracts at an “appropriate time” to help reflect falling rates of the spot market, Oil Minister Dharmendra Pradhan said on Monday.

“We see that at an appropriate time,” he told reporters on sidelines of an industry event here.


He was asked if the government is looking at renegotiating liquefied natural gas (LNG) contracts in view of 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 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.

Pradhan, however, said the long-term contracts have to be honoured.

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 save Rs 8,000 crore.

In 2017, it got Exxon Mobil Corp to lower the price of Gorgon LNG and last year convinced Gazprom to lower rates too.

Sources, however, said the price of LNG from these contracts still was 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 stated that price sensitivities of consumers will have to be respected.

Earlier speaking at the event, Pradhan said as much as Rs 5 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 pipelines are being added to existing 16,788 km network to take the fuel to all corners of the country, he said adding 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.

Source: financialexpress.com

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