State-owned gas utility GAIL India Ltd has sought renegotiating the price of LNG contracted from the US, Oil Minister Dharmendra Pradhan said on Wednesday. GAIL, India’s biggest gas transporter, has deals to buy 5.8 million tonnes of US LNG per annum for 20 years.
In a written reply to a question in the Rajya Sabha, Pradhan said the company has held multiple discussions with the liquefied natural gas (LNG) supplier, the most recent being last month. “GAIL has held a number of discussions with Cheniere Energy and Dominion Cove Point LNG LP for renegotiation of the contracts,” he said.
“The discussions have been held at the working level as well as management level.” The most recent discussion, he said, was held in November. GAIL has a deal to buy 3.5 million tonnes per annum of LNG for 20 years from Cheniere Energy and has also booked capacity for another 2.3 million tonnes at Dominion Energy’s Cove Point liquefaction plant.
This follows Petronet LNG Ltd successfully reopening the August 2009 deal for import of 1.44 million tonnes per annum of LNG for 20 years from Australia's Gorgon project. “Petronet has been under active discussions with the LNG supplier regarding certain commercial aspects under its agreement and has reached an understanding related to the subject with ExxonMobil,” Pradhan said. He did not elaborate.
Sources said GAIL wants to renegotiate the 2011 sales and purchase agreement port of 182.5 trillion British thermal units of LNG (equivalent to approximately 3.5 MT ) annually, with yearly fixed fees of $548 million and a term of 20 years. It had agreed to pay Cheniere a price of $3 per million British thermal unit plus 115 per cent of the final settlement price for the New York Mercantile Exchange Henry Hub natural gas futures contract for the month in which the relevant cargo is scheduled.