India renegotiates costly LNG deal with Exxon, Chevron

India has renegotiated an overpriced deal with US companies Chevron and Exxon Mobil for liquefied natural gas (LNG) imported from their project in Gorgon in Australia, making it more affordable to Indian consumers.

A consortium led by American majors Chevron and Exxon Mobil that operates the Gorgon project has agreed to charge 13.9 per cent?of the prevailing UK Brent oil price at the port of delivery, against the 14.5 per cent?at the port of loading as was originally agreed to, says a petroleum ministry source.

This, according to petroleum minister Dharmendra Pradhan, will result in savings of more than Rs10,000 crore over the 20-year period.

Petronet LNG, had signed a 20-year agreement in 2009 to buy 1.44-million tonnes per annum of LNG from the Gorgon project, at a price equivalent to 14.5 per cent?of the prevailing rate of Brent crude.

A joint venture formed by state-run oil and gas companies with Gaz de France as its strategic partner, Petronet LNG had last year sought a minimum 10 per cent?reduction in price of LNG contracted from the Gorgon project.

''Happy to share good news that India has, yet again, been able to address the long-term price issue of LNG from Gorgon to suit Indian market,'' petroleum minister Dharmendra Pradhan said in a tweet.

''Indian customers will receive LNG volumes at an amicable price soon. This is done in a similar way to what we did with LNG from Qatar,'' he said in a separate tweet.

Last year, India favourably re-negotiated its LNG agreement with Qatar to bring down the cost of importing natural gas to less than $5 per unit from $12.

In return, Petronet signed an agreement for additional import of 1 million tonnes of LNG per year for about 12 years with effect from 1 January 2016, at the prevailing market prices. The new contract ends in 2028.

''Going by the old long-term gas contract price, we have succeeded in renegotiating a benefit of Rs 16,000 crore in this calendar year,'' Pradhan had said in his address here at the signing of the modification to the gas sale-purchase agreement with RasGas of Qatar last year.