* Global LNG supply deals face round of renegotiations
* Low demand, rising supply gives buyers upper hand
* Buyers want greater control over supply & reduceddeliveries
By Oleg Vukmanovic and Sarah McFarlane
ROME, Dec 2 (Reuters) - Global oversupply and sliding pricesare pushing big natural gas buyers of LNG from India to China tolook at reworking long-term agreements in what was for long aproducer-controlled market.
Banking on a tide of new liquefied natural gas (LNG) supplyfrom the United States, Australia and Russia hitting marketsthrough 2021, importers are seizing the chance to wringconcessions from existing producers wary of losing market share.
Top exporter Qatar, traditionally averse to grantingconcessions, rolled over in a major contract dispute withIndia's Petronet last month is likely to trigger asweep of reviews, as buyers rush to exploit the precedent, sayindustry sources.
"A year to 18 months ago, sellers could get what theywanted. But now they will do whatever they can within reason tokeep those customers," said one LNG industry source, speaking oncondition of anonymity.
A taste of what could come was seen in 2010-2014 whenRussian gas producer Gazprom gave its Europeanpipeline clients, smarting from steep import bills, deepdiscounts to avert arbitrations and repair ties.
This time, global LNG buyers will be seeking changes to theway long-term contracts are structured in the $120 billionannual trade, such as loosening restrictions on cargo diversionsand reducing imports below agreed floors. Pricing disputes maytake a backseat.
"I think you will see shorter tenures for contracts, 25years is a long time. You've also got some countries like Japanthat traditionally were very much focused on long-term contractswho are more comfortable with spot markets than they werebefore," said Jason Feer, head of business intelligence at Poten& Partners.
Caught out by sinking demand, other buyers likely looking tosweeten deals include Gail India, Chinese state-runenergy giants CNOOC and Sinopec and KoreaGas Corp, sources say.
A Korea Gas Corp official said the company is closelywatching the development of markets where demand is weak.
Japanese importers are playing hard ball with Chevron's giant new Gorgon LNG project in Australia, while astring of 10-year Qatari deals with Japan will likely be allowedto expire in the early 2020s, sources have said.
"The BG Group-Shell LNG supply contracts with China are theelephant in the room," an industry source said, referring toChinese authorities' moves to extract concessions from the twocompanies in return for approving their $70 billion merger.
CHINESE BUYERS
China's Sinopec, facing up to slowing domestic demand, maybe the most high-profile example of a buyer rowing back fromsupply commitments.
On the hook for 7.5 million tonne/year of LNG fromConocoPhillip's AP LNG project in Australia, starting upthis year, Sinopec is looking at reselling large volumes on theopen market, straining ties with Conoco.
A Sinopec spokesman said the firm is considering both long-and short-term market possibilities.
Peer CNOOC, which declined comment, has already begunselling a handful of excess Australian cargoes while also takingsharply less high-cost Qatari LNG than in 2014, stirring talkthat CNOOC-Qatar deals are now under review.
"For the (Chinese) national oil companies (NOCs), resellinginternationally at a loss is politically problematic as thegovernment would prefer they sold domestically at a loss," saidMichal Meidan, director at consultancy China Matters.
"So the best option for the NOCs at this point is to try torenegotiate contracts and make them more flexible, or cheaper,"she said.
With auditors going through their books amid a corruptioncrackdown, Chinese energy firms may not look at contractsanctity in the same way as foreign players, especially ifaggressive tactics help them avoid run-ins with regulators,Meidan said.
"The oversupply and contract renegotiations will lead tomore spot trade. There is a lot of LNG to dispose of and for thenext few years at least, the spot market will be critical toclearing the physical markets," Poten's Feer said. (Additional reporting by Aizhu Chen in Beijing, Meeyoung Cho inSeoul and Nidhi Verma in New Delhi, Editing by William Hardy)
