RasGas to Waive $1bln Penalty on LNG Deal

 

Qatar has agreed to waive $1 billion penalty on India for breaking a long-term LNG contract, and has also consented to change the pricing formula to reflect the slump in global energy rates. 

 

After months of intense negotiations, RasGas of Qatar has agreed to not to press for the $1 billion in penalty that Petronet LNG, India’s biggest import of liquefied natural gas (LNG), has to pay for buying only 68 per cent of the contracted 7.5 million tonnes this year.

 

In a filing to the stock exchange, Petronet said that it is in discussion with RasGas over the ‘current issues under their agreement. However, no biding agreement has been executed’ yet. 

 

Petronet LNG has a 25-year contract to purchase 7.5 million tonnes of liquefied natural gas (LNG) annually. According to Petronet, the long-term contracted price is around $13 per million British thermal unit (mBtu). To this landed cost are added re-gasification costs, transmission tariffs, marketing margins, and local taxes/levies, before the end-user receives it.