India to buy 1 million tonnes Australian liquefied natural gas after new price maths
India will buy an additional one million tonnes (mt) per annum of liquefied natural gas (LNG) from Australia’s Gorgon project after it got Exxon Mobil Corp to cut price agreed to eight years ago.
Exxon will charge 12.5% of prevailing Brent oil price for about 1 mt per annum of additional LNG that Petronet LNG Ltd, India’s largest gas importer, will buy over and above the 1.44 million tonnes already contracted.
The additional volumes were agreed upon after Exxon agreed to slash price of LNG under the 20-year deal signed in August 2009, sources privy to the development said.
Exxon will bear the cost of shipping LNG from Australia to India and will charge 13.9% of the prevailing Brent oil price for the 1.44 million tonnes long-term LNG in place of 14.5% of the price of Japan crude imports or JCC.
The sources said the August 2009 deal was Free on board (FOB) trade where the buyer had to arrange for shipping.
At $50 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 minister Dharmendra Pradhan said in a tweet.
India had used its status of Asia’s third-largest LNG buyer to renegotiate in 2015 the 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.