India is trying to renegotiate LNG deal with Australia and looking at lowering the price of liquefied natural gas it plans to buy from the Gorgon project, says a report form PTI.
According to sources, when LNG deals are being done at 12 per cent or 12.5 per cent indexation, the Gorgon deal is certainly on the higher side.
Hence the Oil Ministry instructed Petronet LNG, a private firm whose chairman is the oil secretary of India, to rework the price.
Petronet 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 of 14.5 per cent of the prevailing oil rates.
The indexation agreed was one of the highest in the world, feels the Oil Ministry and the current company management, hence written to Exxon Mobil, the seller of Gorgon LNG, for reworking the price.
"Oil prices have fallen from over USD 100 per barrel that translated into a price of USD 14.5 per million British thermal unit for Gorgon LNG. But even through rates are less than half of that, still as a matter of principle, the indexation should be lowered," the source said.
LNG in spot or current market is available at USD 5-6 per mmBtu where as Gorgon LNG at current formula will cost USD 6.5 per mmBtu at on oil price of USD 45 per barrel.
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