Worried about new gas discoveries replacing costlier LNG, RasGas has agreed to scale down price at which it will sell LNG to India, provided New Delhi reciprocates by giving fiscal breaks to the sector.

"RasGas vice chairman Ibrahim Ibrahim is coming to India in two weeks' time to renegotiate the price of LNG," informed sources said.

The threat of Reliance Industries swaying prime customers with promise of cheaper gas from its world-class discovery in Krishna-Godavari Basin forced RasGas to agree for a minimum 50 cents cut in the delivered cost of LNG.

The government on its part would bring down sales tax on LNG to a uniform rate of 4 per cent from the current 24 per cent and slash customs duty to zero from the present 5 per cent.

When contacted RasGas managing director Jerry J Wolahan said, "Discussions are going on to resolve last milestones for beginning LNG supplies to India. A high level RasGas team will visit New Delhi in two weeks to tie up loose ends."

He refused to comment when asked if the meeting would renegotiate the LNG Sale and Purchase Agreement.

RasGas had last year signed an agreement with Petronet LNG Ltd, the consortium of public sector oil companies for import of LNG, for supplying 5 million tonnes of LNG at a price linked to basket of crude oil with floor and ceiling price of $16 and $24 dollars per barrel, which the consumers had found too high to accept, sources said.

Prime consumers were willing to take RasGas LNG for only three years, by when Reliance has promised to deliver cheaper domestic gas, they added.

"The delivered cost of LNG at floor price of $16 came to $4 per million BTU (British Thermal Unit) while the price at ceiling was $5.4 per million BTU," sources said, adding power and fertiliser industry, which consumes 80 per cent of natural gas, had indicated that they would not buy gas at anything above $3.5 per million BTU.

Besides cut in LNG price, state-owned gas firm Gas Authority of India Ltd and refiner Indian Oil, who are the principal customers of Qatar gas at Dahej in Gujarat, would also seek amendment in SPA to provide for a provision of penalty in case RasGas fails to delivered the promised quantity on time, they said.

At present, only those who offtakes are liable to pay damages if they are unable to receive deliveries.