Gail India Floats Tender to Buy Six LNG Cargoes

Gail India has launched a tender to buy six LNG cargoes for delivery in 2017, Reuters reported Monday citing trade sources.

Price will be linked to Brent crude, the news agency added.

Indian LNG demand has spiked in recent months as global prices continue to remain depressed. India imported 2,082 million metric standard cubic metres (mmscm) of LNG in May, up 43.4 percent on year, according to data published by Petroleum Planning and Analysis Cell (PPAC). The cumulative import of 4,224 mmscm for the Apr-May, 2016 was higher by 44.4 percent as compared with the corresponding period of the previous year (2,925 mmscm).

Cost of importing LNG has dropped sharply this year after New Delhi signed a revised long term contract with Doha. Qatar is largest supplier of LNG to India. Given the backdrop of low global LNG prices, Petronet LNG insisted on renegotiating its long term contract with RasGas. In December, the two parties signed a revised deal. The revised formula bases the price on a three-month average figure of Brent crude oil, replacing a five-year average of a basket of crude imported by Japan, with a rider that Petronet buys an additional 1 million tons of LNG annually. Qatar also waived off a $1.5 billion penalty against India for lifting less gas than agreed.

Cost of LNG that India imports from Qatar has slipped below $5 per mmBtu post signing of revised long-term deal.