India’s oil minister Dharmendra Pradhan has today met with industry officials including Qatar energy minister Saad Sherida Al-Kaabi to discuss lowering the price of Liquefied Natural Gas (LNG). Qatar, India’s long-term LNG supplier, has, however, refused to renegotiate its contract with India.
India signed a long-term LNG deal with Qatar in 1999 which was renegotiated in 2015, leading to an extra one million tonnes per annum (mtpa) of LNG from Qatar and a 50% price cut for India. The country imports 8.5mtpa of LNG from Qatar which comes to $9-10 million British thermal unit (MBtu), double the rate of LNG provided on the spot market.
According to Press Trust of India, Pradhan said: “All energy producers have to revisit this old practice and come to the new methodology of pricing, keeping demand and supply in mind. We need to re-examine the pricing mechanism.” He added that the long-term market is facing a challenge due to users’ preference to buy gas from the spot market for less money.
Kaabi stated that Qatar is willing to meet increased demand for gas but is not willing to renegotiate. Kaabi said: “We don’t renegotiate existing contracts. Contracts are contracts for the duration we sign them for. We as businesses understand that the sanctity of contract is important for both sides. And for the credibility of both sides, both parties must respect that. We are looking forward to adding more volumes in India and negotiating additional volumes.”
India consumes 157 million standard cubic metres per day (MSm3/d) of gas and Prime Minister Narendra Modi has said that the country aims to increase the share of natural gas in its energy mix to 15% by 2030.