India Looking at Reducing LNG Imports from Qatar

India is contemplating reducing LNG imports from Qatar under its long term contracts, BusinessLine newspaper reported Sunday.

The newspaper, citing multiple sources, reported that with spot LNG prices being lower by almost $6 a unit (mBtu) than the prevailing long-term price it has with Qatar’s RasGas, India is looking at cutting the contracted volumes by about 10 per cent.

RasGas is supplying 7.5 million tonnes of LNG annually to Petronet LNG under the long-term agreement. The agreement, which was signed in 1999, provides for flexibility of reducing the volumes on acceptable terms, BusinessLine said.

At present, this gas is priced at $13 a unit, while the spot delivers at India’s shores are at around $7 a unit.

According to the newspaper, high level talks are on between India and Qatar, though New Delhi allows companies to procure LNG under open general licence.

Under the open general licence, the marketer is free to purchase and sell based on commercial consideration. “The ties, which the two countries have had, make it a sensitive issue. Since this will not be a commercial decision, lot will depend on the political powers,” an official told BusinesLine.

“With new gas markets opening up for India, including the US, the country will have to re-align its gas import strategy and look at best deals in pure commercial terms,” the official said adding that even Qatar would like to maintain its strong position.