Qatar cuts gas price for India

New Delhi: After 51 meetings, India has been able to re-negotiate the long-term gas contract with Qatar at $6-7 per million British thermal units (mmBtu) against the agreed price of $12-13 per mmbtu. This will lead to a saving of Rs 4,000 crore per year for the country.

Qatar has also agreed to waive off a penalty of Rs 12,000 crore on India for failing to buy agreed quantity of gas in 2015.

It took 51 meeting between the officials of the two sides to come to an agreement, which shows how tough the negotiations were and it even involved Prime minister Narendra Modi.

This is a long-term contract which has in place since 1999 till April 2028 between Qatar’s RasGas and India’s Petronet LNG to buy 7.5 million tonnes a year of LNG.

Also RasGas and Petronet LNG have entered into a binding sale and purchase agreement (SPA) for supply of an additional one MTA of LNG to India starting in 2016 for onward sale to four Indian entities: Indian Oil Corporation, Bharat Petrol-eum Corporation, GAIL (India) and Gujarat State Petroleum Corporation.

Petronet had reduced purchases by about a third in 2015 due to high prices, substituting costly supplies from Qatar with cheaper spot shipments. As per the new agreement, LNG volumes not taken by Petronet from RasGas during 2015 will be taken and paid for by Petronet during the remaining term of the sale and purchase agreement.

India has been trying to leverage its position as one of the world’s biggest energy consumer to strike a better bargain with the international oil companies. The deal also reflects as to how crash in oil prices and a global gas glut is forcing oil producers to offer better deals to retain their share in global energy trade.

This was underlined by oil minister Dharmendra Pradhan, who suggested that once it used to be difficult to even get an appointment with Opec nations and this year Opec secretary-general Abdullah al-Badri visited the country to hold an institutional dialogue.

“In the changed economic scenario world-wide where oil prices have slumped to multi-year lows and gas prices have fallen, India felt it should not suffer,” said Mr Pradhan.