In a major energy diplomacy coup for the Narendra Modi government, Qatar has nearly halved the price of gas it sells under a 25-year contract and waived a payment liability of Rs.12,000 crore arising from India's refusal to import the committed number of shipments in 2015 under the `take-or-pay' clause.
Petronet LNG, India's largest importer of gas in ships, and Qatar's RasGas have agreed to a new pricing formula that would see gas price dropping to $6-7 per unit from the original $12-13. India is the second liquid gas buyer after China to have successfully renegotiated a longterm contract in tune with the changed reality of slump in prices and supply glut in the global energy market.
Oil minister Dharmendra Pradhan described the renegotiated deal as a “win-win“ outcome of “statesmanship“ shown by the leaders of the two countries.A consensus on need to reopen the deal in the backdrop of low global oil and gas prices emerged during Qatari Emir Sheikh Tamim bin Hamad Al-Thani's visit in March. Pradhan reinforced that concensus during his visit to Doha in November at the head of a delegation that included Petronet MD Prabhat Singh.
The new formula is linked to Brent crude, the European benchmark, and would entail a saving of Rs.4,700 crore annually for the fertiliser industry alone, the biggest consumer of liquid gas. A lower fuel cost would automatically reduce the government's fertiliser subsidy .
Impact on power tariffs would be nominal. But gas utility GAIL would stand to benefit since the lower price would prompt gas demand, raising utilisation of the utility's pipelines.Singh said the main driver was the realisation on both sides of India's muscle as a buyer and Qatar's imperative to maintain market share.
Petronet LNG, India's largest importer of gas in ships, and Qatar's RasGas have agreed to a new pricing formula that would see gas price dropping to $6-7 per unit from the original $12-13. India is the second liquid gas buyer after China to have successfully renegotiated a longterm contract in tune with the changed reality of slump in prices and supply glut in the global energy market.
Oil minister Dharmendra Pradhan described the renegotiated deal as a “win-win“ outcome of “statesmanship“ shown by the leaders of the two countries.A consensus on need to reopen the deal in the backdrop of low global oil and gas prices emerged during Qatari Emir Sheikh Tamim bin Hamad Al-Thani's visit in March. Pradhan reinforced that concensus during his visit to Doha in November at the head of a delegation that included Petronet MD Prabhat Singh.
The new formula is linked to Brent crude, the European benchmark, and would entail a saving of Rs.4,700 crore annually for the fertiliser industry alone, the biggest consumer of liquid gas. A lower fuel cost would automatically reduce the government's fertiliser subsidy .
Impact on power tariffs would be nominal. But gas utility GAIL would stand to benefit since the lower price would prompt gas demand, raising utilisation of the utility's pipelines.Singh said the main driver was the realisation on both sides of India's muscle as a buyer and Qatar's imperative to maintain market share.
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