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Differences over pricing have put the brakes on the dialogue with Qatar for sourcing additional long-term liquefied natural gas (LNG).
India was looking to source at least an additional 2-3 million tonnes annually from the world’s largest LNG exporting nation. Petronet LNG Ltd (PLL) was in talks with RasGas of Qatar. “The talks have been put on hold, as there were differences over gas pricing. India is a price-sensitive market,” a senior official in the know of the developments said.
Asked if bilateral pressures led to the negotiations being put on hold, sources said, “No. There are other gas sources also available and the companies do not want to rush into contracts.”
Currently, PLL sources 7.5 million tonnes annually from Qatar through a long-term contract. But with domestic gas output on the decline and no new sources going on stream immediately, the companies have to go in for imports. The companies are buying on short-term (one year) contracts or getting spot cargoes.
Petronet imported 9.29 million tonnes of LNG at its Dahej terminal in 2011-12; this is expected to go up slightly this fiscal.
Not much difference
Today, the difference between the landfall point LNG price in India for both long-term contract and spot market is not wide. While long-term LNG (from RasGas at Petronet LNG’s Dahej terminal) is about $10/mmBtu, the spot price is between $11 and $12/mmBtu. The short-term contracted LNG is cheaper than the prevailing long-term contract price, an official said. The price of long-term LNG imported from Qatar has been linked to JCC (Japanese Crude Cocktail) and varies on a monthly basis. Besides Qatar, LNG is sourced from Australia, Malaysia, Algeria, Nigeria, and Yemen. GAIL (India), Petronet and GSPC are also scouting for long-term contracts of 10-15 million tonnes annually during 2013-14 for Dahej, and the soon to be commissioned Kochi and Dabhol terminals.
The capacity of the Dahej terminal is expected to reach 12.5 million tonnes annually by 2013 and 15 million tonnes by 2015-16 after expansion. The capacity of Shell’s Hazira terminal is also being expanded from 3.6 million tonnes to 5 million tonnes in the next three-four years. The Kochi terminal will have the capacity of 5 million tonnes and Dabhol (RGPPL’s terminal) will add another 5 million tonnes.
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