https://www.engineeringnews.co.za
Business|Energy|Gas|Lifting|LNG|Petroleum
Business|Energy|Gas|Lifting|LNG|Petroleum
business|energy|gas|lifting|lng|petroleum

Qatar not to accede to Indian demand seeking renegotiations of LNG contracts

30th January 2020

By: Ajoy K Das

Creamer Media Correspondent

     

Font size: - +

KOLKATA (miningweekly.com) – Qatar, the largest supplier of liquefied natural gas (LNG) to India, has turned down a request from the latter to renegotiate long-term supply contracts.

India demanded that the pricing mechanism for LNG imported from Qatar, linked to crude oil, needed to be revisited and long-term contracts renegotiated, based on a new mechanism. However, turning down such a request from India, Qatar has firmly underlined the “sanctity” of contracts already signed and said these cannot be renegotiated, although the Gulf nation was willing to commit additional LNG supplies at new prices.

India imports an estimated 8.5-million tons a year of LNG from Qatar, under two long-term contracts, with the landed price currently at $9 to $10 per million metric British thermal unit. The current landed price of LNG sourced from the spot market is almost half the landed price of Qatari LNG. The two contracts are valid until 2028.

Under the long-term contract, the price of supplies from Qatar spikes every time crude oil prices surge. LNG imports from the US or Russia into India are not linked to international crude prices. Qatar sells LNG to India at a price equivalent of 12.67% of the three-month average of Brent crude oil price.

“All energy producers have to revisit this old practice and come to a new methodology of pricing keeping demand and supply in mind. We need to re-examine the pricing mechanism of the long term natural gas deals with Qatar,” India Petroleum and Natural Gas Minister Dharmendra Pradhan said soon after a meeting with his Qatari counterpart on Monday.

In response, Qatar Energy Minister Saad Sherida al-Kaabi said: “We don’t re-negotiate existing contracts. Contracts are contracts for the duration we sign them for. We as a business understand the sanctity of contract is important for both sides. And for the credibility of both sides, both parties must respect that. We are looking forward to adding more volumes in India and negotiating additional volumes.”

In 2015, India and Qatar renegotiated a long-term supply contract for 7.5-million tons a year and to move away from benchmarking the price to a 60-month average of Japanese Crude Cocktail, to the three-month average of Brent crude oil and lifting an additional one-million tons a year with the savings at a time when Brent was pricing was low.

Similarly in 2017, India re-negotiated a supply contract with ExxonMobil Corporation and lowered the price for Gorgon LNG.

India currently consumes 157-million standard cubic meters a day of natural gas of which half needs to be sourced from overseas. This consumption meets roughly 6.3% of the country’s energy needs, with government targeting natural gas's contribution to total energy needs increasing to 15% by 2030.

Edited by Creamer Media Reporter

Comments

Showroom

Yale Lifting Solutions
Yale Lifting Solutions

Yale Lifting Solutions is a leading supplier of lifting and material handling equipment in Southern Africa. Yale offers a wide range of quality...

VISIT SHOWROOM 
VEGA Controls SA (Pty) Ltd
VEGA Controls SA (Pty) Ltd

For over 60 years, VEGA has provided industry-leading products for the measurement of level, density, weight and pressure. As the inventor of the...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Magazine round up | 24 May 2024
Magazine round up | 24 May 2024
24th May 2024

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.47 0.535s - 158pq - 2rq
Subscribe Now