Qatar is set to make Australian liquefied natural gas (LNG) less competitive, as the world’s No.1 supplier has reportedly cut its long-term contract prices.
Qatargas is said to have lowered the index for LNG against crude oil, from 15% to 10.2% to Brent crude on a delivered ex-ship basis. According to Australia’s Financial Review, prices fell from around $9 per million British thermal units (MmBtu) to $6.12/MmBtu (at oil at $60 a barrel).
Earlier this month, Qatargas was reported to have closed long-term deals with Sinopec and Singapore’s Pavilion Energy, under such terms.
None of the companies involved have commented on the matter, Kallanish Energy notes.
The slope to Brent means that the price of LNG is calculated as percentage to a Brent crude contract.
The reduction is perceived by market players as increased trouble for Australian LNG producers such as Woodside and Santos. Despite the current supply glut and prospects of lower future demand for gas, Qatar is investing a huge amount of money to expand its liquefaction capacity and maintain its global leadership in LNG exports.
This post appeared first on Kallanish Energy News.