-
Petronet expects lower price in Qatar LNG contract renewal, eyes more term deals
India’s largest importer of liquefied natural gas (LNG) Petronet LNG expects to extend its term contract with Qatar at prices lower than what the West Asian gas exporter offered in recent contracts with countries like China and Bangladesh. Additionally, the company is in talks with various international suppliers for more term deals as India seeks to secure long-term LNG supplies in a market prone to volatility.
“We are hopeful that we will be getting definitely a better deal than the others. That is our expectation,” Petronet LNG’s Chief Executive Officer (CEO) A.K. Singh said, adding that renegotiation talks have started and are moving in a “positive direction”. Singh, however, declined to share specifics of the pricing levels being sought by the company.
According to him, there are indications that recent contracts by Qatar have been finalised at a slope of 12-13% to the price of Brent crude.
As part of the current term deal with Qatar that ends in 2028, Petronet LNG imports 8.5 million tonnes per annum (mtpa) of LNG, or super-cooled gas, at a slope of 12.67 per cent to the price of Brent plus an additional charge of $0.52 per million British thermal units. Apart from extending the Qatar contract at a lower price, the company is also understood to be looking at increasing the import volumes by up to 1 mtpa. Petronet’s Qatar LNG contract is India’s biggest term contract for super-cooled gas.
According to Singh, the extreme price volatility that was seen over the past couple of years in global LNG markets has established that term contracts, and not spot purchases, are the most viable option for securing supplies at a reasonable price. He said that increasing gas consumption on a sustainable basis through spot purchases is not a viable option. Therefore, Petronet LNG is in talks with other global suppliers for more term contracts.
As one of the major importers of LNG globally, India was adversely impacted by the tightening global supply and surging spot LNG prices last year in the aftermath of Russia’s invasion of Ukraine. India’s oil and gas companies, public sector players in particular, are scouting for long-term LNG purchase agreements with global suppliers to secure reliable supplies of super-cooled gas. Recently, Indian Oil corporation inked term deals with Abu Dhabi’s ADNOC Gas and France’s TotalEnergies for importing 1.2 mtpa and 0.8 mtpa of LNG, respectively.
Share This
