Home > Finance > qatar: Qatar ready to discuss India’s demand to cut long-term LNG prices

qatar: Qatar ready to discuss India’s demand to cut long-term LNG prices


New Delhi: Qatar has agreed to discuss India’s demand to renegotiate the long-term LNG contract, reversing the stand it took just four months ago, as crumbling spot prices and collapsing demand during the pandemic has put global suppliers under tremendous pressure.

“Qatar was earlier cold to the idea but has now agreed to discuss. A meeting is being arranged and should happen over the next week or two,” said a person familiar with the matter.

Executives at Petronet LNG, which imports Qatari gas are likely to meet via videoconference with Qatar gas executives soon to discuss how prices can be cut for the 8.5 million tonne a year of supply deal that expires in 2028.

Petronet LNG is also planning to approach ExxonMobil to cut prices on its 20-year-contract for 2.5 million tonnes a year of LNG from its Australian project, said the person.

The decision to discuss Indian demand is a climbdown for Qatar, whose energy minister had rejected at January-end Indian petroleum and natural gas minister’s suggestion to reopen the contract. India had then demanded delinking LNG price from crude oil rates, as the spot rate in the gas market had sharply fallen to around $4 per mmBtu while oil prices were around $60 a barrel, keeping long-term gas prices high at around $8-9 per mmBtu.

Since then oil prices have fallen to $35 per barrel, going below $20 per barrel for some days in between. But LNG prices too have crumbled, falling to a record low of $1.3 per mmBtu last week.

The Indian side would like Qatar to cut LNG prices either by delinking it from crude and linking it to some gas market benchmarks or lowering the Brent-linked slope that determines the price. Qatari LNG is priced at a slope of 12.7% of the three-month average Brent prices. The recent fall in crude oil prices has lowered Qatari LNG rates to about $5 per mmBtu, which is much lower than the rates three months ago but appears expensive compared to that in the spot market.

Some of the recent global LNG supply contracts have been signed at a slope of around 10.5% and the Indian side is hopeful that Qatar could extend similar terms to the old buyers.

“It’s a buyer’s market. Globally, suppliers are today far more worried about placing their volumes than about prices,” said an industry executive, who did not wish to be identified.

Petronet had renegotiated long-contract with Qatar in 2015 under which Qatar had agreed to price gas at a three-month average of Brent crude instead of the 60-month average used until then. In return, Petronet agreed to buy an additional one million tonne per annum of LNG from Qatar. But this time, India may not be in a position to offer to buy more as domestic demand for gas is not so strong, said industry executives.

Source link

TAGS , , , ,
Hi guys, this is Kimmy, I started LicensetoBlog to help you with the latest updated news about the world with daily updates from all leading news sources. Beside, I love to write about several niches like health, business, finance, travel, automation, parenting and about other useful topics to keep you find the the original information on any particular topic. Hope you will find LicensetoBlog helpful in various ways. Keep blogging and help us grow as a community for internet lovers.