New Delhi — India is open to a review of LNG prices under its long-term contracts, oil minister Dharmendra Pradhan said Monday, reflecting market concerns about high prices for LNG imports at a time when spot prices have been on a prolonged downtrend.
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The bulk of LNG contracts in Asia, the largest LNG importing region, are tied to oil-linked long term contracts but falling spot LNG prices have resulted in a pushback from buyers in countries like Japan and China, who are seeking to renegotiate long-term supply contracts or diversify procurement to spot markets.
The S&P Global Platts JKM for October cargoes was assessed at $4.408/MMBtu Monday, down 12.5 cents/MMBtu from Friday, during the Platts Market on Close assessment process. Comparatively, the oil-linked LNG price could be anywhere from $7-$10/MMBtu depending on the contract.
"We will look at reviewing long-term LNG contracts," the minister said at an industry event in New Delhi, adding that India would wait till an appropriate time to review its existing long-term LNG contracts as the country had renegotiated long-term deals in the past.
Pradhan didn't say how the reviews will be conducted and whether it will lead to renegotiations, but maintained that standing long-term LNG contracts would be honored at the first instance.
He said the Indian gas market has to be in sync with the prevailing trend in global markets.
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Earlier this month, India's gas importer Petronet LNG had said it favored renegotiation for its long-term LNG supply deals in case spot prices remained dampened.
India currently has long-term LNG supply contracts with Qatar for 8 million mt/year, the US for 5.8 million mt/year, Russia for 2.5 million mt/year and Australia for 1.44 million mt/year.
India plans to invest $70 billion in its natural gas sector through promotion of city gas distribution networks, setting up LNG liquefaction facilities and natural gas exploration. It aims to raise the share of natural gas in the overall energy mix by 15% by 2030 from the current 6.23%.
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