Qatar’s RasGas waives off $1 billion penalty on India’s Petronet LNG

After weeks of concentrated efforts, RasGas of Qatar has decided to waive off USD 1 billion penalty on India for breaking a long-term LNG contract.

Not only this, Qatar has also in-principle agreed to change the pricing formula from a 60-month average of a basket of Japanese crude oil prices to a 3-month average of Brent crude.

This decision will lower cost of LNG to USD 7-8 per million British thermal unit as compared to USD 12-13 currently.

Petronet LNG Ltd, India's biggest import of liquefied natural gas (LNG), had to pay for buying only 68% of the contracted 7.5 million tonnes this year.

A new deal is underway, under which Petronet will take the quantities it did not take this year during the remainder of the contract period.

State-owned GAIL India Ltd, Indian Oil Corp (IOC) and Bharat Petroleum Corp Ltd (BPCL) have committed to buy all of the 7.5 million tonne a year of LNG that Petronet is to import from Qatar.

The reduced offtake by the buyers forced Petronet to cut its purchase from RasGas, which led to idling of three cryogenic ships it had chartered hired for ferrying gas in its liquid form at sub-zero temperatures from Qatar to its import terminal at Dahej in Gujarat.