State-owned gas utility GAIL India has sought renegotiation of India’s most expensive LNG import deal as it feels gas from Australia’s Gorgon project will find few takers.
Petronet LNG Ltd, a private firm whose chairman is the petroleum secretary, had in August 2009 signed a 20-year deal to buy 1.44 million tonnes per annum of liquefied natural gas (LNG) at a price equivalent to 14.5 per cent of ruling oil rates.
This translates into $14.5 per million British thermal unit price at $100 per barrel oil price. After adding shipping cost, 5 per cent import duty and the cost of converting liquid gas back into its gaseous state, the Australian gas will cost close to $18 at Kochi port.
The Gorgon LNG price compares to US Henry Hub rate of about $4 using which GAIL has recently signed deals to import gas from the US. Qatar, the world’s largest LNG producer, sells gas to India at much lower rates.
GAIL director (marketing) Prabhat Singh this month wrote to Petronet managing director A K Balyan seeking reduction in price of Gorgon LNG in view of changed scenario worldwide.
Sources said several long-term LNG deals, including Russian giant Gazprom’s agreement to sell gas into Europe, have been renegotiated in the recent past in view of the slump in benchmark gas prices.
GAIL, Indian Oil Corp, Bharat Petroleum and ONGC hold 12.5 per cent each in Petronet.