Pradhan planning Qatar visit to pressure RasGas

Vol 18, PW 21 (18 Jun 15) People & Policy

Dharmendra Pradhan wants to negotiate directly with Qatar’s government to secure breathing space for state-owned Indian companies hit by soaring penalties for turning back long-term LNG cargoes from RasGas.

Pradhan wants to fly to Qatar in July to convince its minister of energy and industry Mohammed Bin Saleh Al-Sada to change the pricing formula for long-term LNG RasGas supplies to Petronet-LNG. “We have yet to fix a date,” says a ministry source.

“First Petronet-LNG is trying to invite RasGas officials to India for negotiations. Pradhan’s visit to Qatar is contingent on the outcome of the RasGas visit to India.

” No doubt the situation is critical. With spot LNG prices trading at a $5 discount to term LNG from RasGas, Dahej offtakers GAIL, IndianOil and Bharat Petroleum can't find customers.

Since January 1, 2015 Petronet-LNG has returned 17 long-term cargoes to RasGas and by May 30 its 'take or pay' penalty had risen to Rs3170cr ($493m) for 813m cubic metres of undelivered LNG. IndianOil's penalty is Rs864cr ($135m) for 228m cubic metres and Bharat Petroleum must pay Rs475cr ($74m) for 128m cubic metres.

Under ‘take or pay’ contracts you either take the gas or pay a penalty. Pradhan raised the matter with Al-Sada on the sidelines of the 6th OPEC International Summit held on June 4 in Vienna.

“We need a solution fast,” says a source. “Our companies are bleeding.

LNG Summit