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formula – as an example, say at $0.05 per mmBtu LNG export facility that will be located near Lake
[$1.38 per 1,000 cubic metres] discount to [the Charles, Louisiana.
West India Marker],” Singh said.
The West India Marker fell to $3.725 per What next
mmBtu ($103.73 per 1,000 cubic metres) in Janu- India has a history of seeking better supply deals
ary, with Platts noting at the time that it was the low- while the energy market is experiencing price
est level since it had started assessing the marker in pains. New Delhi managed to convince the
January 2010. This was before the effects of the pan- Qatari government in 2015 to halve the cost of
demic had even set in, and since then the marker its long-term gas supplies. In exchange, India
had fallen to $1.925 per mmBtu ($53.25 per 1,000 agreed to raise its purchases from 7.5mn tpy to
cubic metres) at the start of this month. 8.5mn tpy. India then moved on to a successful
Singh argues his suggestion is a win-win solu- renegotiation of long-term supply contracts with
tion, ensuring that India receives prices always Australia and Russia.
below the spot price, while “suppliers in turn will New Delhi tried in January to revisit its sup-
have a guaranteed market over the longer term”. ply deal with Qatar once more, but its efforts fell
He said more than a dozen of the 147 LNG sup- flat, with Energy Minister Saad Sherida al-Kaabi
pliers the company talks to had made “extremely saying: “We are not renegotiating contracts, we
good offers”. stick with contracts – both sides – and we look
“We are now working around that and per- for additional new contacts and volumes to com-
haps in the next two to three months you may ply with requirements from India.”
hear something from us to that effect,” the exec- Doha’s bargain position may have weakened
utive added. enough that New Delhi may be willing to try
The plunge in prices has already seen the again. Qatari gas cost an estimated $8.5-9 per
company rethink one major new term contract it mmBtu ($235.11-248.94 per 1,000 cubic metres)
was negotiating with US gas developer Tellurian. when oil was $60-70 per barrel. The average spot
price for July delivery into East Asia, meanwhile,
Deal delays was estimated at $2.10 per mmBtu ($58.09 per
The Houston-based company revealed on June 1,000 cubic metres) on June 5.
5 that Petronet had let their memorandum of The IEA has said India and China’s expand-
understanding (MoU), which was signed in ing gas consumption will help support a recov-
September 2019, lapse. ery in global demand in the coming years. India
Under the terms of the MoU, Petronet was is expected to close in on South Korea’s position
negotiating not just the purchase of up to 5mn as the world’s third-largest importer of LNG by
tpy of LNG from the proposed Driftwood export 2023, while China will overtake Japan as the
terminal on the US Gulf Coast, but also a $2.5bn global leader.
equity acquisition in Driftwood Holdings. Singh told Platts that while the South Asian
Tellurian and Petronet had envisioned final- giant’s gas demand had fallen from a pre-
ising the transaction by March 31, but after COVID-19 high of 160mn cubic metres per day
executives from the US company visited India to 110 mcm during the lockdown, it had already
in February the deadline was pushed back to recovered to 145 mcm per day and it would not
May 31. Tellurian spokesperson Joi Lecznar said be long before the lost ground had been regained.
last week that while the agreement had lapsed, He added that LNG imports, which shrank 40%
the company was still in talks with Petronet and to 1.5mn tonnes in May, would pick up over the
other possible offtakers for the LNG terminal. next six months.
The lapsing of the deal is anticipated to delay Given that Qatar is embarking on a major
an FID on the export project, given that Tellurian expansion of its LNG export capacity and the
has only managed to finalise one supply deal – demand outlook is plagued by uncertainty –
Total agreed in July 2019 to buy 1mn tpy as well the biggest threat remains a second wave of
as a $500mn investment in Driftwood Holdings. COVID-19 infections – it would not be sur-
The Driftwood project includes gas produc- prising to hear in the coming months that
tion, gathering, processing and transportation Indian buyers had indeed managed to secure
facilities, along with the 27.6mn tpy Driftwood more favourable term contracts.™

Week 23 11•June•2020 www. NEWSBASE .com P5