IN what would bring down the input costs for a cross-section of Indian industry, Qatar’s RasGas has halved the price of liquefied natural gas (LNG) supplied to India’s Petronet LNG for the residual period of a 25-year contract signed in 1999. Besides, the world’s biggest LNG supplier has also agreed to waive penalties of Rs 12,000 crore estimated earlier for New Delhi’s failure to lift the entire contracted quantity of 7.5 million tonnes of LNG in 2015.

Domestically produced natural gas is currently priced at $4.24 per million British thermal units on a net calorific value basis, thanks to an 18 per cent cut that came into effect from October 1.

According to the deal struck on November 10, Doha and New Delhi would also top up the LNG contract by an additional 1 million tonnes starting January 2016.

The deal marks Prime Minister Narendra Modi’s biggest diplomatic win in the energy sector since he came to power last year, according to political observers and industry analysts. He has been trying to leverage India’s position as one of the world’s biggest energy consumers to strike better deals with world’s leading energy suppliers.

Thanks to the deal, the Qatar gas would now cost around $6-7 per mBtu compared with $12-13 per mBtu prevalent in 2015, said petroleum minister Dharmendra Pradhan. The annual benefit to India due to the price cut would be around Rs 4,000 crore, Pradhan added. While LNG is used by power companies as fuel, it is a feedstock for fertiliser, petrochemical and sponge iron units and is also used by city-gas firms and LPG bottling units.

Pradhan said the deal materialised thanks to the Prime Minister discussing the matter at least thrice with the Emir of Qatar Tamim bin Hamad Al Thani. The new price would be linked to that of international crude oil and move in tandem with Brent. FE

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