Qatar's RasGas prefers short-term LNG contracts in India
06 December 2016
Qatar's RasGas now prefers short-term LNG contracts from customers in India after its earlier long-term contract with India's Petronet LNG flopped and the contract had to be reworked.
India, the world's fourth-largest buyer of LNG, needs more LNG terminals to unlock demand, its chief executive Hamad Mubarak Al Muhannadi said on Tuesday at the Petrotech energy conference in New Delhi.
Muhannadi also said that India, Asia's third-largest economy, will also become the world's second-largest spot and long-term LNG buyer this year.
India, meanwhile said it wants liquefied natural gas importers like Japan and Korea to join hands to bring more "equitable" trade deals.
India and Japan, in September 2013, had set up a multilateral group of buyers for LNG to push for lower prices for the fuel and New Delhi is now seeking other importers to join them.
"A number of large Asian LNG buyers, including India, could benefit by joining hands and thereby bringing in more equitable trade deals," petroleum minister Dharmendra Pradhan said at 5th IEF-IGU Ministerial Forum held on sidelines of the Petrotech conference in New Delhi.
While the global gas prices have cooled in line with oil rates in last two years, Asian countries - the biggest buyers of seaborne LNG - sometimes paid five or six times more for the deep-chilled gas than piped gas consumed in North America, where prices have plunged because of growing availability amid a boom in production from shale deposits.
Also, weakening currencies have inflated import bills. After joining ranks with Japan, India is keen to rope in South Korea and possibly also China in the buyers club. Pradhan said LNG prices have been soft over the past 18-24 months much in tandem with crude prices and emerging LNG demand-supply interplay.
"We have also seen that LNG contracting mechanism is changing with short term contracts growing and replacing long term contracts," he said adding analysts believe it will be a buyer's market for a while.
India wants to turn an oversupply of LNG to its favour as it seeks to increase use of natural gas in its energy mix to 15 per cent from current 6 per cent now in an attempt to reduce the dependence on crude oil imports.