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GAIL in trouble over US LNG commitments-III: What's the price going to be in India?
Jun 06: So what is the landed price of GAIL US LNG going to be in India?
8Quite expensive by any yardstick
8The FOB price of US LNG comes to around $ 6.8/mmbtu, including a 115% premium over the Henry Hub price of $ 3.30/mmbtu and a mandatory capacity charge of $ 3/mmbtu.
8The shipping cost will be around $ 2.0/mmbtu, to which an import duty of 2.5% and liquefaction charge of $ 0.7/mmbtu can be added.
8The price at which HH indexed gas can land in India (ex-terminal) will be around $ 9.7/mmbtu.
8This is expensive by any yardstick. Spot prices are invariably going to be significantly lower because of LNG over-supply globally, and oil price will have to hover around $ 65/bbl for the price to pierce the $ 9.7/bbl level.
8The final delivered price will be even higher and this is going to turn away price sensitive Indian buyers.
8If oil prices go down to $ 40/bbl, which is not unlikely, the loss for GAIL could be a staggering $ 3.2/mmbtu under this business model.
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