RasGas of Qatar is likely to sell liquefied natural gas to public sector Petronet LNG at a fixed price instead of a price indexed to crude oil to cut delivered cost of imported LNG to just over $3.5 per million British Thermal Unit.

"Promoters of PLL have cut regassification, marketing and transportation cost of imported fuel by 70 cents per million BTU, a pre-condition set by RasGas for reopening pricing of LNG. RasGas will now be convinced to sell LNG at a fixed price instead of $16-$24 per barrel crude oil price linked band previously agreed," sources close to negotiations said.

Stating that RasGas was agreeable to lowering prices at its end to make the imported fuel price comparable with highly subsidised domestic natural gas, sources said the Qatar-based firm may sell LNG to PLL at $2.2-$2.5 per million BTU.

This would mean a delivered cost of between $3.54 and $3.84 per million BTU.

First LNG from Qatar is scheduled to land at Dahej in Gujarat in early 2004.

PLL has cut regassification cost from 57 cents per mmbtu to 44 mmbtu while the pipeline transportation cost has been scaled down from 59 to 32 cents per mmbtu. Marketing cost has been halved to 10 cents per mmbtu. The sales tax component on LNG would add another 37 cents per mmbtu to the cost.

Oil and Natural Gas Corporation will pay PLL 15 cents per mmbtu for extracting C2, C3 gas from LNG, they said adding the cost on Indian side has come down from 178 to 108 cents per mmbtu.

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