Qatar gas cheaper than domestic supply

When the Emir of Qatar lands in New Delhi on Wednesday, India will have reasons to feel more than just honoured by his visit.

The country is receiving natural gas from Qatar roughly every fourth day at a price which is cheaper than its own.

Liquefied natural gas (LNG) from Qatar after regasification costs $3.37 million British thermal unit (mbtu), which is about 17 per cent cheaper than gas being sold by the consortium operating in the Panna, Mukta and Tapti fields. India started importing Qatari gas last year, but it had clinched the price with state-owned Rasgas in 1999.

"At that point of time, it was considered very expensive but now, owing to the current volatility in international prices, it is working out to be cheaper than even domestic gas," said Petronet LNG Ltd (PLL) Managing Director Suresh Mathur.

The first foreign gas which was available to India was from Qatar at PLL's Dahej terminal. The company will be expanding capacity at Dahej to 10 million tonnes from the present 5 mt. It is in the process of setting up another terminal at Kochi with a capacity of 2.5 mt. Qatar did not have any spare gas to commit to India though Mathur said India would be seeking additional quantities during the visit.

Qatari Emir Sheikh Hamad Bin Khalifa Al Thani will be accompanied by his brother and Prime Minister Sheikh Abdullah Bin Khalifa Al Thani.

Industry observers attach a great significance to this visit since the Emir visited the country for the first time in 1999, which was also the year PLL entered into the contract with Rasgas in Doha. Qatar is expanding its liquefication capacity and is yet to finalise contracts with countries it has signed agreements with.

PLL hopes that the additional quantity of 7.5 mt can be shipped to India by 2009, by which time it will be in position to handle the additional gas.

The pricing advantage may not last since the pricing will be reworked then.