India to save Rs 40 billion post Exxon LNG price revision

India is likely to save about Rs 40 billion from the recent LNG contract renegotiation with Exxon Mobil Corporation. The new rates will kick in from January 2018. Petronet LNG Limited (PLL) had in August 2009 signed a 20-year deal to buy 1.44 million tonnes (mt) of LNG from Exxon’s share in the Gorgon project in Australia. The deliveries under the contract started in early 2017. PLL has stated that the revised price is still to be documented. Exxon Mobil Corporation has agreed to charge 13.9 per cent of the prevailing Brent oil price at the port of delivery rather than the previously decided 14.5 per cent of the oil rate at the port of loading. Besides changing the indexation, LNG pricing will be on a DES (delivered ex-ship) basis rather than the previously decided FOB (free-on-board) basis. At a $50 per barrel price, Gorgon LNG would have cost $7.25 per million British thermal units (mmBtu) at the port of loading. As per the revised terms, Gorgon LNG delivered at the Indian port will cost $6.95 per mmBtu.