The liquefied natural gas to be supplied by RasGas of Qatar to Petronet LNG Ltd will cost the Indian consumer around $3.55 per million British thermal units.

RasGas has agreed to charge a fixed price for the LNG to be supplied by it to Petronet for 25 years. The price will be linked to the international crude price of $20 a barrel.

This will translate into an f.o.b price of  $2.55 per mbtu for RasGas LNG at Qatar. Add to it transportation to Dahej in India, Customs duty, regassification charges, further transportation to the consumer, and deduct the 15 cents per mbtu that Oil and Natural Gas Corporation will pay for extracting C2/C3 from it, and the retail price of this gas will work out to around $3.55 per mbtu. This is nearly the same price that is being paid to domestic producers of natural gas.

The gas supply and purchase agreement between RasGas and Petronet was signed in New Delhi on Friday. Simultaneously, Petronet also signed agreements with GAIL Indian Ltd, Indian Oil Corporation and Bharat Petroleum Corporation Limited for distribution of regassified LNG.

Earlier, RasGas was demanding a flexible price linked to the international crude prices of $22-24 a barrel.

While officials of RasGas and Petronet refused to divulge the LNG price worked out between the two, it was learnt that though the Indian side had tried hard to bring down the price further, RasGas stuck to its stand and emphasised that anything below this would make the entire project unviable.

Petronet, a joint venture of state-run IOC, ONGC, BPCL, and GAIL, will commission the $400-million Dahej LNG import and regassification terminal in Gujarat by December this year and receive the first shipment of LNG from Qatar in January 2004, according to Petronet managing director Suresh Mathur.