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Lower spot LNG may push India's top gas importer to renegotiate deals

India’s top gas importer Petronet LNG will consider renegotiating  its long-term supply deals to secure lower liquefied natural gas (LNG) prices if spot prices remain weak for two to three years, its managing director said.

An inexorable decline in spot market prices for LNG is driving some buyers in Japan and China to request delays in term cargoes, while others are looking to lift lower volumes under their term contracts from LNG sellers.

“There is no doubt. We have to be sensitive to the international market. If spot prices continue to be low for 2-3 years then you don’t have much of a choice, and there would be a case to look at renegotiation,” Prabhat Singh told Reuters.

Petronet has a deal to buy 7.5 million tonnes of LNG annually from Qatar’s Rasgas and 1.44 million tonnes from Exxon’s Gorgon project in Australia.

The Indian company is buying gas under these deals at $8.25-$9.50 per million British thermal units, he said, while spot LNG LNG-AS prices are around $4/mBtu.

Petronet previously renegotiated pricing of the Australian deal in 2017 and with Rasgas in 2015.

Singh also said there was a gradual shift to pricing long-term gas purchase deals off spot price indices rather than crude oil prices.

India wants to raise the share of gas in its energy mix to 15% in next few years from 6.5% currently.

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