P-LNG and Qatargas meet for talks on January 27

Vol 23, PW 5 (16 Jan 20) Midstream & Downstream

Petronet-LNG is embarking on a second round of high-level talks in an attempt to crack open the 25-year SPA it signed with Qatargas predecessor RasGas more than 20 years ago.

This report learns oil minister Dharmendra Pradhan, accompanied by Petronet-LNG managing director Prabhat Singh, is meeting his Qatari counterpart and Qatar Petroleum vice-chairman Saad Sherida al-Kaabi at the Oberoi Hotel in Delhi on January 27. Also in attendance will be IndianOil chairman Sanjiv Singh who is hosting the meeting.

In preparation for the meeting Petronet-LNG is preparing an in-depth analysis of spot LNG price trends based on December (2019) and January (2020) deliveries. Their aim: to illustrate the continuing disparity between expensive landed 'term' cargoes from Qatargas and cheap 'spot' imports.

"If spot LNG prices continue to rise," says a source, "Petronet-LNG will have a hard time convincing Qatargas to bring down its price." Not helping Petronet-LNG is the lingering threat of war between the US and Iran following the assasination of Iranian general Qasem Soleimani on January 3 and its impact on Brent-linked spot LNG prices.

Four days after Soleimani's death Brent touched $71.17 but by January 14 had dropped back to $64.71. "If Brent stays at $65-$68 levels," adds a source, "LNG spot prices will go up, they're already heading north."

Hoping against hope, Petronet-LNG is banking on Brent dropping by March (2020) so spot LNG to India returns to $5/mmbtu or less.