New Delhi : India has renegotiated the pricing of liquefied natural gas (LNG) imported from Australia’s Gorgon project to save more than Rs 10,000 crore over the life of the contract. Exxon Mobil Corp has agreed to charge 13.9 per cent of the prevailing Brent oil price at the port of delivery rather than previously decided 14.5 per cent of the oil rate at the port of loading, a source privy to the development said. “Besides changing the indexation, LNG pricing will be on DES basis rather than FOB previously decided,” he added. Delivered ex ship (DES) is a trade term requiring the seller to deliver goods to a buyer at an agreed port of arrival.
At 450 per barrel oil price, Gorgon LNG, whose supplies started in January this year, would have cost $7.25 per million British thermal unit at the port of loading. Adding another $1 for transportation would have led to delivered price of $8.25 in the old contract. In the new formula, Gorgon LNG delivered at Indian port will cost $6.95 per mmBtu.
“Happy to share good news that India has, yet again, been able to address the long-term price issue of LNG from Gorgon to suit Indian market,” Oil Dharmendra Pradhan said in a tweet.
India had used its status of Asia’s third largest LNG buyer to renegotiate in 2015 the LNG pricing formula with Qatar’s Rasgas to buy the gas at half the original price. “Indian customers will receive (Gorgon) LNG volumes at an amicable price soon. This is done in a similar way to what we did with LNG from Qatar,” Pradhan said in another tweet.
Petronet LNG Ltd, India’s largest liquefied natural gas importer, had last year formally sought at least 10 per cent cut in price of LNG it plans to buy from Australia’s Gorgon project. Petronet LNG, a private firm whose chairman is the oil secretary, had in August 2009 signed a 20-year deal to buy 1.44 mtpa of LNG at a price equivalent to 14.5 per cent of the prevailing oil rates.
