News
23/12/25
India’s Petronet offers lower LNG regas rates
Mumbai, 23 December (Argus) — India's state-run LNG terminal operator Petronet
LNG has offered over 25pc discount on regasification tariffs to fellow state-run
gas distributor Gail at the expanded capacity of the Dahej LNG terminal on the
west coast, which is set to be commissioned in 2026, sources with knowledge of
the matter told Argus . Petronet has offered to lower the regasification tariff
for Gail at 52.05 rupees/mn Btu ($0.58/mn Btu) from the current Rs66.06/mn Btu
at the 5mn t/yr expanded capacity of Dahej — which is set to be commissioned in
March 2026 . The lower-than-expected rate compares with Rs69.36/mn Btu projected
for 2026 based on the 5pc annual rise in regas tariff that Petronet charges its
customers for Dahej Terminal. Regas tariffs stood at Rs62.91/mn Btu in 2024.
Petronet also charges around Rs114.5/mn Btu at its 5mn t/yr Kochi terminal to
the long-term customers, which may be the highest regasification tariffs
globally. State-run Gail is understood to have booked 1.5mn t/yr of LNG
utilisation out of the 5mn t/yr expanded LNG terminal capacity at Dahej, sources
said. Of the 17.5mn t/yr Dahej terminal capacity, 8.5mn t/yr is dedicated to
long-term back-to-back contracts with QatarEnergy. The remaining 8.25mn t/yr is
sold on a tolling basis to LNG importers including Gail, GSPC, IOC, BPCL, and
Torrent Power. Petronet LNG is also reported to have offered customers a further
reduction in regasification rates of up to Rs30/mn Btu from 2028 onwards, when
its long-term LNG supply contract renewal of 7.5mn t/yr with QatarEnergy kicks
in , sources added. Neither Petronet nor Gail responded to Argus queries for
confirmation. Once implemented, LNG importers from 2026 onwards are expected to
bear only the cost of natural gas plus applicable customs duty and
regasification tariffs, as most supply contracts are on a delivered basis,
eliminating shipping costs. Government criticism The tariff reduction likely
follows sharp criticism Petronet received from the gas regulator, the Petroleum
and Natural Gas Regulatory Board (PNGRB), in its December 2024 report, which
stated that Dahej's "terminal capacity expansion (from 5mn t/yr in 2004 to
17.5mn t/yr currently) should have led to a reduction in regasification costs."
LNG importers in the country have also complained that Petronet LNG and
privately-owned Shell charge some of the highest regasification rates in the
world to regasify LNG. However, following the criticism, Petronet described the
regasification tariff as "reasonable" . This was later followed by the
regulator, PNGRB, directing LNG terminal operators in the country to list
current regasification and truck-loading charges on their websites to bring
transparency to terminal operations and boost utilisation. The is set to
increase competition among other offtakers like IOC, GSPC, BPCL, AMNS, and
Torrent Power to also negotiate similar deals with Petronet. It may also add
pressure to neighbouring terminals — privately-owned Shell's 5mn t/yr Hazira
terminal and HPCL's 5mn t/yr Chhara terminal, both struggling to reach even 50pc
utilization — to cut their regasification rates, traders said. Shell and HPCL
are actively allowing third party access to their terminal, unlike Mundra,
Dabhol, and Ennore. Utilisation Capacity utilisation at the Dahej was 92pc
during April-October, the highest in the country, oil ministry data show. The
Dahej terminal's high utilization justifies the reduction in regasification
tariff, however few scepticisms also have raised on Petronet's' decision to put
Gopalpur terminal without anchor customers and proper pipeline connectivity. The
management aims to complete the 5mn t/yr Gopalpur terminal project by 2028.
Market participants fear Gopalpur terminal could face challenges similar to
Kochi terminal, which has struggled to achieve even half of its capacity
utilization for its most of the operational period since 2013. Kochi's
utilisation stood at 24pc during April-October this year, oil ministry data
show. The terminal achieved its highest LNG regasification at 17 trillion Btu
(0.35mn t) during July-September quarter, up 21pc on the year and 31pc higher on
the quarter, the management said in its latest earnings press conference in
November. Nevertheless, the lower regasification rates are expected to boost
India's LNG imports and natural gas usage, supporting government plans to make
the country a gas-based economy, with the share of natural gas in its primary
energy mix targeted to rise to 15pc by 2030, from around 7pc in 2024. By
Rituparna Ghosh Send comments and request more information at
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