Vastavam web: India will work with Japan to make long-term liquefied natural gas (LNG) import deals more affordable for its price-sensitive consumers, it said on Wednesday, as these two big importers try to secure better prices and concessions from suppliers.The world’s biggest LNG buyers, all in Asia, are increasingly clubbing together to secure more flexible supply contracts in a move that shifts power to importers from producers in an oversupplied market.
An alliance of big buyers puts pressure on exporters such as Qatar, Australia and Malaysia. They prefer to have clients locked into fixed supply contracts that run for decades and make buyers take fixed amounts of monthly volumes irrespective of demand, with no right to re-sell surplus supplies to other end-users.India’s cabinet on Wednesday approved the proposal to sign a Memorandum of Cooperation with Japan that it said would help to diversify gas supplies, strengthen energy security and lead to more competitive prices.
“The agreement will have a swap clause as well, like we can swap our Australian LNG from Gorgon project with LNG booked by Japan with Qatar,” India’s oil minister Dharmendra Pradhan, who is travelling to Japan next week, told reporters.India last month agreed to buy more LNG from the Gorgon project after Exxon Mobil agreed to cut prices under a long-term deal.Pradhan earlier this week said that India wanted to set up a gas trading exchange for transparent market-driven prices that would encourage investment into the sector.
India wants to increase its share of gas in its energy mix from about 6.5 percent now to about 15 percent in the next few years. Locally produced gas is sold at a government-set price formula.