India is in talks with Qatar to import at least 10 per cent less liquefied natural gas (LNG) under a long-term deal after a slide in spot prices has cut demand by local buyers, an Indian government source with knowledge of the negotiations said.
New Delhi would for the first time use a 10 per cent reduction permissible under a 25-year contract with Qatar’s RasGas to import up to 7.5 million tonnes a year of the super cooled fuel, said the source.
“We want to lift as little volume as possible under the contract,” the source told Reuters, adding that India intended to use a tolerance limit of 10 percent in 2015.
“But we are negotiating for cuts deeper than 10 percent. All LNG terminals are running at lower capacity as customers are not lifting volumes,” said the source, who declined to be identified due to the sensitivity of the issue.
Telephone calls to Qatar’s LNG producer RasGas seeking comment were not immediately answered. India’s biggest importer Petronet LNG received its first cargo from RasGas under the current deal in 2004 with pricing linked to the oil.
India’s LNG import costs under the deal are currently around $13 per million British thermal units (mmBtu), versus spot prices of $6-$7 per mmBtu, according to RK Garg, head of finance at Petronet LNG.
