Via Reuters:
After getting Qatar and Australia to lower gas price, India today pitched for flexible terms for LNG purchase including provision of pricing review, flexible take or pay and abolition of destination restriction clause.
Speaking at the LNG Producer-Consumer Conference here, Oil Minister Dharmendra Pradhan said the global LNG market is undergoing a major transformation driven by new supplies which has created a situation of oversupply.
“He urged the global LNG markets, in which producers and consumers of LNG have equal stakes, to join hands to design flexible terms such as pricing review, flexible take or pay, abolition of destination restriction clause in the LNG contracts,” an official statement said.
These reforms, he said, are essential for developing a transparent, efficient, truly global and balanced LNG market.
India, which is among the biggest importer of liquefied natural gas (LNG), has used his position to lower prices, contracted when oil was raging high, to reflect the slump in rates.
In 2015, India did not take all of the 7.5 million tonnes a year of liquefied natural gas (LNG) it had committed to buy from Qatar and instead renegotiated price of the long-term deal to save Rs 8,000 crore.
Qatar also agreed to waive take-or-pay conditions on the quantities India did not take.
Last Month, Exxon Mobil Corp in principle agreed to cut price of 1.44 million tonnes a year LNG being imported from Australia’s Gorgon project.
It is now seeking to reopen the LNG contracts with the US.
Here’s the glut in all of its monstrous glory:
Bruce Robertson captures the blood-thirsty absurdity of it all today:
In the next few weeks there will be an announcement that a large, gas-intensive Australian manufacturer is to lay off about 1000 workers. The ripple effects this will have on society will be devastating and most certainly could have been avoided.
It is likely this news will be made to the backdrop of an opportune reaction from the Turnbull government: there is a gas “crisis” in Australia and workers have lost their jobs because of skyrocketing electricity prices. Either the Prime Minister or one of his ministers will swiftly propose the solution: extract more gas and lift the fracking moratoriums.
What will be strategically left out of this narrative is that onshore coal seam gas has proven to be very high-cost. It is globally uneconomic in a low-cost gas world. We are currently experiencing a massive international glut in the supply of gas that is keeping prices at historic lows. Producing high-cost onshore gas is not going to bring the price of domestic gas down and stop further job redundancies. But it is financially advantageous for the handful of gas companies running this national sideshow – Origin, Santos, Shell and BHP/Exxon.
To find a policy response that will bring down domestic prices, save gas intensive industry and jobs and lower electricity costs for the domestic and industrial consumer, we do not have to look far – just to Western Australia.
In WA, industrial consumers of gas pay less than $6/GJ for gas. On the east coast, however, prices have recently been in the range of $10 to $16/GJ. Why is this? The answer is simple: WA has a domestic gas reservation policy.
Cheap gas for everyone except you.
