Reuters MELBOURNE (Reuters) — India has won a big price cut on a 20-year liquefied natural gas (LNG) deal with global giant ExxonMobil Corp. in a rare contract renegotiation, a bad sign for global producers in a heavily oversupplied market.
Long-term contracts are rarely revised in the LNG market, and for a big producer to cave in shows how supply from new plants in Australia and the United States over the past two years has transformed the market, analysts said.
“This trend is overall a negative for sellers, as they are forced to provide more flexibility to buyers’ needs to maintain their markets,” said Saul Kavonic, an analyst with energy consultants Wood Mackenzie. India has been aggressive in seeking cheaper deals, also renegotiating a contract with Qatar in 2015, but the real pain for producers would come if major Asian buyers in Japan, Korea and China followed suit.
India’s oil minister, Dharmendra Pradhan, said on Saturday the country had been able to renegotiate a contract agreed in 2009 for around 1.5 million tonnes a year of LNG from ExxonMobil’s share of the Gorgon LNG project in Australia going to Petronet LNG. “Happy to share good news that India has, yet again been able to address the long term price issue of LNG from Gorgon to suit Indian market,” Pradhan said on social media.Speech