To save on foreign exchange, India has indicated that it will further renegotiate long-term contracts with countries related to liquefied natural gas (LNG) amid prices of the commodity having halved in the last year. In the past two years, India has successfully renegotiated the price of long-term contracts with countries like Russia, the US, and Qatar.
With a glut in liquefied natural gas, prices have dipped more than half in the past one year. As demand for natural gas is growing in Asia’s third-largest buyer, India, against the backdrop of schemes like Ujjawala and city gas distribution networks to provide affordable and universal access to “clean fuel to all”, New Delhi may once again go for renegotiating prices for already contracted deals.
India has long-term contracts with the US (6.5 MTPA), Russia (2.85 MTPA), Qatar (8.5 MTPA), and Australia (1.44 MTPA). As India is planning to double the natural gas share to 15% in energy consumption by 2030, LNG imports may rise threefold, to 70 MTPA.
“Long-term contracts are supposed to be honoured. We will look at an appropriate time. In the past also we had renegotiated the deals”, Indian Minister of Oil and Natural Gas Dharmendra Pradhan said at a natural gas event on Monday.
India is the third-largest energy consumer in the world, and will become a top consumer in a decade, the minister added on Monday.
Last year, India had renegotiated a gas import deal with Russia’s Gazprom and saved around $1.4 billion over the contract period ending in 2040, Pradhan claimed. India’s state-owned gas utility GAIL India renegotiated the price agreed in 2012 with the Russian firm.
In 2017, the Indian government successfully renegotiated the price of LNG with Qatar’s RasGas and America’s Exxon Mobil Corp.
The Gas Authority of India Ltd. (GAIL) has also renegotiated a contract to buy about 5 million metric tonnes per annum of LNG from the US firms Sabine Pass and Cove Point LNG Terminals that would save around $600 million.
The Indian government has aimed to boost the share of gas in the energy mix in the country from 6.2% to 15% by 2030 in comparison to the global average of around 24%.
It is estimated the demand for LNG in India will grow more than 10% in the current financial year due to a massive expansion in gas networks as a result of several government-funded schemes since in the last three years.
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