Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

India asks Qatar to cut LNG price by 60%
DNA India ^ | 27 April 2015 | PTI

Posted on 04/27/2015 10:13:01 AM PDT by thackney

India has asked its largest liquefied natural gas (LNG) supplier Qatar to cut gas prices to match the 60% slump in global rates in last one year.

India buys 7.5 million tonnes a year of LNG on a long-term 25 year contract, indexed to a moving average of crude oil price.

The price of LNG from Qatar comes close to $13 per million British thermal unit as compared to the $6-7 rate at which it is available in the spot or current market.

The high price of LNG under the long-term contract has led to users in fertiliser and power industry finding it cheaper to use alternate fuels like naphtha and fuel oil, a top source said.

Petronet LNG Ltd, which has been buying LNG from Qatar on a long-term contract since 2004, has asked for a 10 per cent cut in import volumes this year, they said.

"The contract is a take or pay wherein the buyer has to take the contracted volume every calendar year or pay for it. But the contract also provides for a flexibility that gives the buyer (the option) to defer taking 10% less of yearly supplies. These volumes can be taken at anytime during the duration of the contract," the source said.

Similarly, the contract also provides for the buyer to seek 10% more quantity over the contracted volume in any year, with the excess volume being adjusted during the remaining duration of the contract.

The source said Petronet has already exercised the 10% option and is in negotiations to raise this volume to 25%.

Petronet, which is a joint venture of state-owned oil companies, wants these deferred volumes at the price at which LNG from spot market is currently available.

It feels that by averaging the long-term price and the spot rate, it can sell Qatar LNG to consumers, the source said.

LNG from Qatar, on the long-term, was once considered the cheapest. The fuel cost $2.53 per mmBtu for the first five years, from 2004 to 2009.

For the next five years, the price was linked to moving average of crude oil price of last 5 years and thereafter direct indexation with crude oil.

The source said Qatar has so far not responded to India's request.

"We have told them that India is a big consumer of their gas. India bought over 14 million tonnes of LNG in 2014. Of this, over 12 million tonnes came from Qatar. Imports from Qatar comprised of the long-term contract as well as purchases on spot basis," he said.

State-run gas utility GAIL, refiners Indian Oil Corp (IOC) and Bharat Petroleum Corp Ltd and explorer Oil and Natural Gas Corp (ONGC) are equal promoter of Petronet with 12.5 per cent stake each.


TOPICS: News/Current Events
KEYWORDS: energy; lng; naturalgas; qatar

1 posted on 04/27/2015 10:13:01 AM PDT by thackney
[ Post Reply | Private Reply | View Replies]

To: thackney
Well, one can always ask.

Reminds me of a joke, the punch line of which starts with the words "Yeah, I get slapped a lot, but..."

2 posted on 04/27/2015 10:18:04 AM PDT by Steely Tom (Vote GOP for A Slower Handbasket)
[ Post Reply | Private Reply | To 1 | View Replies]

To: thackney

And of course if natural gas prices shot through the roof India would ask Qatar to charge more than the contracted price.


3 posted on 04/27/2015 10:18:10 AM PDT by Yo-Yo (Is the /sarc tag really necessary?)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Yo-Yo

Signing a 25 year contract to make sure India gets Natural Gas:

They should understand the Qatar also had motivation to sign the same 25 year contract.


4 posted on 04/27/2015 10:24:18 AM PDT by thackney (life is fragile, handle with prayer)
[ Post Reply | Private Reply | To 3 | View Replies]

To: thackney

Weren’t we told how “smart” and “savvy” India and China were a couple years ago when the new mercantilism was all the rage and “buying up the supply” of energy was critical?

Weren’t people who argued for free markets in energy ridiculed as being “behind the times”?

Lesson: Bet against the free market at your own risk.


5 posted on 04/27/2015 10:26:41 AM PDT by denydenydeny ("World History is not full of good governments, or of good voters either "--P.J. O'Rourke)
[ Post Reply | Private Reply | To 1 | View Replies]

To: denydenydeny
Weren’t we told how “smart” and “savvy” India and China were a couple years ago when the new mercantilism was all the rage and “buying up the supply” of energy was critical?

Yeah and I recall that China made big investments in sub-Saharan Africa in anticipation of a continued rise in the price of petroleum.

6 posted on 04/27/2015 10:32:41 AM PDT by Steely Tom (Vote GOP for A Slower Handbasket)
[ Post Reply | Private Reply | To 5 | View Replies]

To: denydenydeny

When Israel begins selling LNG from the Tarar and Leviathan fields, it will drive world prices down.


7 posted on 04/27/2015 11:19:42 AM PDT by Jan_Sobieski (Sanctification)
[ Post Reply | Private Reply | To 5 | View Replies]

To: Jan_Sobieski

Just how large do you imagine the LNG supply from Israel is going to be relative to the world demand?


8 posted on 04/27/2015 12:47:57 PM PDT by thackney (life is fragile, handle with prayer)
[ Post Reply | Private Reply | To 7 | View Replies]

To: thackney

My understanding is that Tamar and Leviathan are the 2 largest natural gas fields ever discovered and could radically change the LNG market as we know it...


9 posted on 04/27/2015 12:58:10 PM PDT by Jan_Sobieski (Sanctification)
[ Post Reply | Private Reply | To 8 | View Replies]

To: Jan_Sobieski

Not even close.

Leviathan is the largest of the two. It is about 40% the recoverable gas we have the Marcellus field.


10 posted on 04/27/2015 1:27:35 PM PDT by thackney (life is fragile, handle with prayer)
[ Post Reply | Private Reply | To 9 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson