News Wrap: Deal cheer for gas stocks

Gas stocks perked up smartly last week - importer Petronet LNG gained about 3 per cent while transmitter GAIL (India) and city gas distributor Indraprastha Gas were up about 5 per cent. The trigger was the Oil Minister’s indication of a favourable price renegotiation of liquefied natural gas (LNG) imported from Exxon Mobil’s Gorgon project in Australia. Reports say that the revised contract will price the gas at 13.9 per cent of prevailing benchmark Brent crude at the port of delivery as against 14.5 per cent of crude at the port of loading. This could mean price reduction of $1-$1.5 a unit and could save Petronet LNG more than Rs 10,000 crore over the 20-year term of the contract for the supply of 1.44 million tonnes per annum. The benefits will flow down the chain. For GAIL, this renegotiation also improves the possibility of renegotiating its contract to import gas from the US. In 2015, India’s renegotiation with Qatar’s RasGas nearly halved the contract’s price.

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