Gazprom Singapore pays meagre penalty for defaulted LNG deliveries to India
A former unit of Russia's Gazprom is paying a 'meagre' penalty for the liquefied natural gas (LNG) cargoes it had failed to deliver to India since early June to absolve itself of all contractual liabilities, a top government official said.
Gazprom Marketing and Trading Singapore (GMTS), under a long-term 20-year contract, was to supply 2.5 million tonne of LNG to state-owned GAIL (India) Ltd this year. But it has not supplied any cargo or shipload of LNG since early June.
"The contract provides for a penalty of 20 per cent of the agreed price in case of a default by the supplier. GMTS is paying that penalty to absolve itself of all contractual liabilities," the official, who wished not to be identified, said.
The price of LNG under the long-term contract comes to USD 12-14 per million British thermal unit and GMTS is paying 20 per cent of this for the default, he said.
"LNG in spot market is being sold at triple the long-term price and so anyone would be happy to pay the meagre ...