Petronet LNG has initiated negotiations with multinational Exxon Mobil to rework pricing for a 1.4-million-tonne-a-year procurement agreement from Gorgon project in Australia. Petronet has been forced to seek changes in the deal after spot prices crashed, making long-term supplies expensive.
The spot LNG prices are hovering around $4.7/million British thermal units (mBtu), Platts data shows. On the other hand, the Gorgon LNG would cost at least $6.5/mBtu, which is indexed to Japanese Crude Cocktail (JCC) price. A customer pays another $1.5-$3/mBtu till the gas reaches its doorstep, which includes re-gassification and marketing charges and other state levies.
“The Gorgon gas is priced at a slope of around 14% of JCC, whereas current prices are hovering around 12%. Petronet has initiated negotiations and we are supporting it,” said an official of the company which has agreed to buy LNG procured from Australia. In August 2009, Petronet signed a deal with Exxon, which has a 25% stake in Gorgon, to source 1.44 mtpa of LNG from the project over a 20-year term.