Reuters are reporting that India's biggest importer of US LNG is trying to re-negotiate prices with the US seller, undermining plans by US President Donald Trump to export more gas to the fast-growing Asian nation.
Any new LNG agreements with India will depend on how GAIL and Cheniere of the US deal with a long-term supply contract signed in 2011 for an estimated US$22 billion.
India's GAIL has deals to buy 5.8 million tpy of US LNG for 20 years, mostly with Cheniere, but is now asking to re-negotiate the price. A commissioning cargo was sent last year, but supplies in earnest will only likely start in 2018.
Two sources at state-run GAIL said they were trying to re-negotiate the contract.
Cheniere, currently the only US company exporting LNG, announced that it was not open to a lower price.
The contract price is calculated on a formula based on US spot prices for natural gas, and currently costs India US$8.50 per million British thermal units (mmBtu).
Traders said that Cheniere would struggle to send cargoes at a lower price.
Asian spot LNG prices LNG-AS, which exclude all extra costs like shipping, have fallen by more than 40% this year to US$5.40 per mmBtu amid ballooning oversupply as production from Australia and the US rises.
Other LNG buyers, including top importer Japan, are also pressing for better terms.
Read the article online at: https://www.lngindustry.com/liquefaction/30062017/lng-price-row/