Deal with Qatar lowers gas prices to $5/mmBtu

The Dollar Business Bureau

The revised agreement of Petronet LNG Limited (PLL) with RasGas of Qatar has helped to lower down the importing cost of natural gas to below $5 per mmBtu from the earlier $12 per mmBtu, said Dharmendra Pradhan, Minister of State for Petroleum and Natural Gas on Monday.

In December 2015, India convinced Qatar to slash the prices of natural gas by almost half, to align with the declining global energy prices, thus helping the country in saving billions of dollars. India also got the oil exporting nation to waive off a liability of Rs.12,000 crore, for gas short-lifting.

"Previously, the prices of LNG during 2015 were above $12 per mmBtu. Now, under the revised contract, the prices applicable works out to less than $ 5 per mmBtu, on the basis of current market prices of crude," Pradhan informed in a written reply to the Lok Sabha.

This revised prices, effective from January 1, 2016 have made the LNG cheaper for the end customers, he added.

The Oil Minister said Qatar will also waive off a liability of Rs.12,000 crore for 'under-lifting' natural gas by 38 percent.

PLL has a long-term supply agreement of 7.5 mmtpa FOB LNG (free-on-board liquefied natural gas) with RasGas, for 25 years. The shipment of LNG under the agreement started in 2004. 

PLL was formed as a joint venture by the Government of India, promoted by GAIL India Ltd, Indian Oil Corporation, Bharat Petroleum Corp Ltd Oil (BPCL) and Oil and Natural Gas Corporation (ONGC).