Daily News & Analysis: Delinking of new gas contracts from oil augurs well for India

India imports LNG (liquefied natural gas) at very expensive rates due to huge domestic demand and severe fall in domestic gas production due to Krishna Godavari issue.

But that may soon change as world over new gas contracts are being negotiated at cheaper rate and are increasingly getting delinked from oil prices.

GAIL India last year signed a deal with US-based Cheniere Energy Partners to buy 3.5 million tonnes LNG for 20 years, prices of which are linked to Henry Hub benchmark in US.

The landed cost of LNG could be lower than $10/mmBtu (million metric British thermal units).

India at times has to buy spot LNG at prices as high as $18.5-19 per mmBtu.

Following this contract, GAIL had also asked Petronet to renegotiate its expensive deal with Exxon Mobil for Australia's Gorgon project, where landed cost of LNG on Kochi terminal could be as high as $16/mmBtu. MORE

Sign-up for our free weekly newsletter update via email here