Qatari gas producer RasGas has agreed to nearly halve the price of LNG sold to Indian LNG importer Petronet LNG, from about US$12-13/MBtu to US$6-7/MBtu, as of 1 January 2016 and until late 2028. The new contract will introduce market dynamics based on a crude price linked formula, unlike the earlier contract, where RasGas did not allow any change in pricing.
The price revision will help LNG consumers save around Rs 4,000 crore (US$600m) per year and will improve the utilisation of the Dahej LNG terminal that was idled due to high long-term LNG prices.
In addition, the new contract is for a capacity of 8.5 Mt/year, against 7.5 Mt/year; the extra LNG will be sold to Indian Oil, BPCL, GAIL (India) and Gujarat State Petroleum Corporation.
Finally, RasGas has also agreed to waive the take or pay penalty of nearly Rs 12,000 crore (US$1.8bn) on Petronet for a lower off-take during 2015 (only 68% of the contracted 7.5 Mt were bought in 2015) and Petronet will buy the volumes not taken in 2015 during the remaining term of the contract.