Hi,
India has two long term contracts with Qatar RasGas.
FIRST CONTRACT:
Supply of 7.5 mtpa, the contract was signed in 1999 between RasGas and Petronet, with supply beginning from 2004, the FOB contract term is 25 years. Lets break it down into three periods for easier understanding.
From 2004-2009: RasGas to initially supply 5 mtpa till 2006, eventually to be increased to 7.5 mtpa beyond 2006. The price for this first five year period was fixed at
$2.534/mmBTU (12.67% x $20). India had extremely favorable terms, but the honeymoon period ended in 2009.
From 2010-2014: For this five year period, the price was
12.67% x 60 month average of JCC. Qatar got rich. After 10 years, price can now be renegotiated (as per contract terms). So Qatar & India got into negotiations, which continued through 2015, and Petronet continued to import LNG at contractual price of 12.67% of 60 month average of JCC.
The second link shared by
@Patriot forever which you quoted refers to that time period and that negotiation. The article is dated
May 2016 & quotes the minister;
"Earlier the prices during 2015 were in excess of $12 per mmBtu. The current price applicable under the contract works out to less than $5 per mmBtu based on prevailing crude prices,” he said in a written reply to a question in the Lok Sabha."
Read more at:
https://economictimes.indiatimes.co...ofinterest&utm_medium=text&utm_campaign=cppst
After successful negotiations, India got Qatar to change benchmark from JCC to an average of preceding 3 months of Brent price, maintaining the same slope of
12.67% as seen in the first 11 years. This was huge win for Indian negotiators.
While we are at it, lets do a price comparison of May 2016 for India and Pakistan contracts;
India (JCC): 12.67% x (98.604) =
$12.49/mmBtu
India (Brent): 12.67% x (38.173) =
$4.84/mmBtu (as reflected in the article above)
Pakistan (Brent): 13.37% x (38.173) =
$5.10/mmBtu
I fail to understand how you came up with $4.5/mmBtu price tag.
Beyond 2016: Under newly negotiated price of
12.67% x 3 months averaged Brent India was to import 7.5 mtpa till end of contract full term in 2028 (25 years). But in 2020, India thought it could outsmart Qatar and owing to volumes it is importing, can pressurize it to change the benchmark from Oil linked to Gas linked, but Qatar this time said a firm no, citing its other commitments in the region.
The first link shared by
@Patriot forever refers to that attempted negotiation, and was attempting to highlight the price of contract which is clearly
not 'fixed' at $8/mmBtu or $12/mmBtu but is indexed to Brent.
The article is dated
Jan 2020 & clearly states:
"Qatar sells LNG to India at a price equivalent to 12.67 per cent of the three-month average Brent crude oil price. The indexation of Russian LNG is 11.5 per cent."
Read more at:
Oil Minister Dharmendra Pradhan met Qatar Energy Minister Saad Sherida al-Kaabi to press for the "need for realignment of existing long-term LNG contracts with the market to suit the affordability of end consumers"
energy.economictimes.indiatimes.com
SECOND CONTRACT:
Supply of 1 mtpa, the contract was signed in
Dec 2015, effective from 2016 - 2028, at a price of
12.67% x 3 months averaged Brent.
Essentially to avoid penalty from Qatar, India signed an additional volume of 1 mtpa at the same price and terms.
"In 2015, it renegotiated the price of the long-term deal to import 7.5 million tonnes per year of LNG from Qatar, helping in saving Rs 8,000 crore. At that time, Qatar agreed to price LNG at a three-month average Brent oil price instead of the previous practice of pricing it at a 60-month average of Japanese Crude Cocktail (JCC) in exchange for India buying an additional 1 million tonnes per annum of LNG."
I hope this helps in keeping discussion factual. If you have a reference to fixed price contract between Qatar and India contrary to Brent slope, kindly share.
