ONGC eyes Qatar LNG, to ink swap equity deal with RasGas

Oil and Natural Gas Corporation and RasGas of Qatar will finalise an agreement on swap equity as part of the LNG supply arrangement for Petronet LNG Ltd (PLL) by the year-end. India is also looking for additional supply of liquefied natural gas from Qatar but is yet to reach an understanding on the price.

ONGC, one of the promoters of PLL, will take a 5 per cent equity in the liquefaction facility in Qatar in return for RasGas picking equity in PLL. Qatar Energy Minister Abdullah bin Hamad Al-Attiyah told Business Standard that he was open to meeting India's additional requirements for gas. "We are happy with our relation with India and are proud to be the first to India. So far we have delivered 70 cargos of LNG," he said.

The Indian delegation to the World Petroleum Congress, led by Petroleum Secretary SC Tripathi, had called on the Qatar minister. Officials said no agreement on the price issue was reached.

While India sought a price of $4 per million British thermal unit (mbtum), Qatar conveyed that gas prices had moved significantly higher and they were being offered a better price by other consumers like Japan.

Petronet has a fixed price of $2.53 for imports for the first five years of its 25-year term contract with RasGas for 7.5 million tonnes of LNG. This locked in a level of just $20/bbl for the benchmark JCC basket. The JCC price has since then shot to over $48/bbl.

"Qatar said usually gas and oil prices moved in the ratio of 1:6 and therefore it was looking at a price of $10 which is much higher than the Indian expectations," said a member of the Indian delegation.

The issue will come up for discussions in Doha when Petroleum and Natural Gas Minister Mani Shankar Aiyar visits the country in November after a visit to Saudi Arabia.

Oil prices have moved up significantly in the last few months and with the winter approaching, it does not appear to be coming down in the near future.