India has been re-negotiating most of its long-term gas contracts in the last few years to ensure that the users at home get the fuel at the most competitive prices. After successful re-negotiations with Qatar’s RasGas and Exxon Mobil for Australian gas, the latest re-negotiations have been done with Russia’s Gazprom.
In a statement, GAIL (India) said that it has re-negotiated 20-year long-term LNG Sale and Purchase Agreement (SPA) with Russia’s Gazprom Marketing and Trading Singapore. The pact was signed in 2012 to procure 2.5 million tonnes (on discharge ex-ship basis) annually and the supplies are expected to start in the second quarter of 2018.
The two parties have agreed to an adjustment to the price and volume of LNG supply thus enabling GAIL to develop incremental gas markets to offtake the volumes thereby mitigating volume risk.
Though officials involved with the development remained non-committal on the price, indications are that the delivered price will be less by 50 cent to $1 per million British thermal units (mmBtu) compared to the earlier formula agreed upon. The price is based on an oil-indexed formula.
Currently, the long-term contract gas bought by Indian players is in the range of $8.7-$10/ mmBtu and short-term or spot market price is at $11.5-$12/mmBtu. The RasGas supply is at about $8.85/mmBtu. The prices are excluding the re-gasification, marketing margins, transportation charges and the local taxes and levies. The gas will be delivered at Dahej, Dabhol and Kochi terminals in India.
Speaking on the development, BC Tripathi, CMD, GAIL, said: “This deal is a step for GAIL to diversify LNG portfolio by spreading price reference indices across multiple geographies so as to provide consumers greater flexibility in service.” The SPA signed in 2012 was a 20-year LNG sales and purchase agreement following the signing of an earlier Basic Framework Agreement by the two companies on May 18, 2011.
Source: The Hindu Business LinePrevious Next