Business Standard: Changes in Petronet's Original Bid Led to LNG Prices Tripling

As India asks Qatar to cut LNG price to match slump in global rates, a series of changes in original bid has led to the gas price tripling to USD 12-13 per unit. 

In response to a global supply tender floated by Petronet LNG Ltd, RasGas of Qatar had quoted a formula that had a fixed component of USD 2.53 per million British thermal unit and a linkage to global oil and coal rates for supply of 7.5 million tonnes a year of LNG for 25 years, industry and company sources said. 

The LNG price was to rise or fall by 2 cents per mmBtu in tandem with every dollar movement in oil price. At a USD 100 a barrel oil rate, the LNG price was to be USD 4.13 per mmBtu. 

Sources said the second best offer in that tender was from Petronas of Malaysia which quoted the same fixed cost but a slightly higher linkage to oil and coal prices. In case of Petronas, LNG price would have risen or fallen by 3 cents per mmBtu for every rise or fall in oil prices.  MORE