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GAIL offers gas from US for cheaper than Qatar LNG

‘We recently signed LNG procurement contracts from US indexed to Henry Hub prices. We are offering the same Henry Hub indexation price to customers in India,’ GAIL Chairman and Managing Director B C Tripathi said.The delivered price of US gas at Indian ports will be in the range of $12 to 13 per million British thermal units. ‘It will certainly be less than $13,’ he said. In comparison, the landed cost of the LNG that India buys from Qatar on long-term contracts at oil-indexed prices is $13.8. Natural gas produced in India is priced at $4.2 and may double after it is revised shortly. Tripathi said supplies from the US are expected to start from 2017-18.

‘GAIL has an internal requirement of about 1 million tonnes a year and we are hopeful of tying up customers for the remaining 2.5 million tonnes,’ he said.

Natural gas was trading at $4.7 per mmBtu at Henry Hub, the Louisiana clearing house and North American benchmark. After adding the cost of turning the gas into liquid (LNG) and shipping it to India, the landed cost will come to between $12 to 13 per mmBtu. Petronet LNG Ltd, the nation's largest liquid gas importer, buys 7.5 million tonnes a year of LNG from Qatar. At an oil price of $100 per barrel, the landed cost of Qatar LNG is $13.8. LNG contracts tied to oil make them vulnerable to spikes in crude prices. The US has some of the world's lowest gas prices. Apart from the 3.5 million tonens of LNG from Sabine Pass, GAIL has booked 2.3 mt a year capacity in the Cove Point LNG liquefaction terminal at Lusby, Maryland.
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