GAIL (India) Ltd is looking to renegotiate rate of LNG it has contracted from the U.S. and Russia to reflect the current market, the Press Trust of India reported Oct. 4, citing officials familiar with the matter.
GAIL chairman and managing director BC Tripathi described the market structure as having shifted from a "supply constraint market to a supply surplus market."
"We have successfully renegotiated, along with Petronet LNG Ltd., two long-term (LNG import) contracts. We are now working on third and fourth contract," Tripathi said at a Federation of Indian Chambers of Commerce and Industry conference. Though he did not specify which contracts they are working on, officials told Press Trust of India that he was referring to LNG contracts from U.S. and Russia.
India's biggest gas distributor is seeking to renegotiate its 2011 contract with Cheniere Energy Inc. for import of 182.5 TBtu of LNG, or about 3.5 million tonnes, per year, with yearly fixed fees of $548 million for a 20-year term. The company wants to bring down the fixed portion landed cost of LNG to around $7 to $8 per MMBtu in contrast to the present $9.7 per MMBtu, the report said. LNG in the current market is available for less than $6 per MMBtu, the report said.
GAIL in 2012 signed a deal with Russia's OAO Gazprom to buy 2.5 million tonnes a year of LNG for 20 years from the Shtokman LNG export plant in the Barents Sea, with shipments initially expected to begin in 2018-2019, PTI reported. Under the deal, the price of the shipments are linked to crude oil prices, the report said. GAIL is seeking to delay and lower and price of gas is has purchased under the agreement.
GAIL, along with Petronet LNG, has successfully renegotiated a contract with Exxon Mobil Corp. for Australian LNG and bargained with Qatar's RasGas Co. for lower prices.
The Indian company currently has an LNG contract with Dominion Energy Inc. for 2.3 million tonnes of capacity a year from Dominion's Cove Point liquefaction facility.