India looks to sign long-term LNG deal

NEW DELHI: In a first, India’s biggest LNG importer Petronet on Tuesday said it is close to signing a long-term LNG deal benchmarked to daily or spot prices, which generally are lower than standard rates of such contracts.

India bought liquefied natural gas (LNG) under

long-term contracts from Qatar and Australia at an average of $3.5-4.5 per million British thermal unit in the current quarter. Spot or current prices of LNG - gas turned into liquid at sub-zero temperature for ease of transporting in ships - are in the range of $2.

“We are very close to a

long-term deal on the daily benchmark. There will be a

long term deal but on a daily benchmark,” Petronet LNG Ltd CEO and Managing

Director Prabhat Singh told reporters here.

Refusing to give details of the supplier, he said the company was initially looking at buying 1 million tonnes of LNG under such a contract and would scale it up depending on the response from customers.

Petronet had in February sought bids from suppliers for 1 million tones of LNG per year for 10 years, starting 2024. The company wanted 1 million tonnes per annum (Mtpa) of LNG on a delivered ex-ship (DES) basis.

The contract would be priced using a formula linked to both the US’ Henry Hub natural gas futures, as well as the Dutch TTF gas futures, which is uncommon in India where most of the contracts are long-term and linked to crude oil prices.

based on a 2014 governmentset formula that takes average rates from global trading hubs to determine domestic prices twice a year - in April and then in October.