New Delhi - India has renegotiated the price of liquefied natural gas (LNG) it imports from Gorgon project in Australia that will result in savings of more than Rs 10,000 crore, according to Petroleum Ministry sources.
"Happy to share good news that India has, yet again, been able to address the long-term price issue of LNG from Gorgon to suit Indian market," Petroleum Minister Dharmendra Pradhan said in a tweet.
"Indian customers will receive LNG volumes at an amicable price soon. This is done in a similar way to what we did with LNG from Qatar," he said in a separate tweet.
According to the ministry source, the Gorgon project operators' consortium led by American majors Chevron and Exxon Mobil have agreed to charge 13.9% of the prevailing UK Brent oil price at the port of delivery, rather than 14.5% at the port of loading as was agreed earlier.
A joint venture formed by state-run oil and gas companies with Gaz de France as its strategic partner, Petronet LNG had last year sought a minimum 10 % reduction in price of LNG it agreed to buy from the Gorgon project.
The company had signed a 20-year agreement in 2009 to buy 1.44 million tonnes per annum of LNG at a price equivalent to 14.5% of the prevailing oil rate.
Last year, India favourably re-negotiated its LNG agreement with Qatar to bring down the cost of importing natural gas to less than $5 per unit from $12.
In return for the renegotiation, Petronet signed an agreement for additional import of 1 million tonnes of LNG per year for about 12 years with effect from January 1, 2016, at the prevailing market prices. The new contract ends in 2028.
"Going by the old long-term gas contract price, we have succeeded in renegotiating a benefit of Rs 16,000 crore in this calendar year," Pradhan had said in his address here at the signing of the modification to the gas sale-purchase agreement with RasGas of Qatar last year.