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India has signed a groundbreaking deal with Qatar to extend LNG imports by another 20 years until 2048. The deal, worth USD 78 billion, was signed on the sidelines of India Energy Week (IEW) and will see India continue to buy 7.5 million tonnes of LNG per year from Qatar. The agreement includes provisions for the gas to be used in various industries, including electricity production, fertilizer manufacturing, and conversion into compressed natural gas (CNG).
Sources have revealed that the renewed deal offers significantly lower prices than the current agreement, resulting in estimated savings of USD 6 billion over the contract period. The original 25-year agreement, set to expire in 2028, has now been extended for an additional 20 years. However, a separate negotiation will be conducted for the second contract, which involves the purchase of 1 million tonnes per annum (MTPA) of LNG.
The renewal of the LNG deal comes after intense negotiations between India and Qatar over the past few months. The negotiations were further complicated by heightened tensions when a Qatar court sentenced eight former Indian Navy officials to death in October for alleged spying for Israel. However, the sentence was later reduced in December, leading to a more favorable atmosphere for the deal.
Qatar’s energy minister and top officials from QatarEnergy attended the signing ceremony at the IEW, highlighting the importance of the agreement. India, as the world’s third-largest energy consumer, sees natural gas as a crucial transition fuel in its journey towards achieving net-zero carbon emissions by 2070. The Indian government aims to raise the share of natural gas in the country’s energy mix to 15 percent by 2030, up from the current 6.3 percent.
Under the new contract, the pricing structure will remain similar, with the LNG prices linked to the prevailing Brent crude oil price. However, the fixed charge of USD 0.52 per million British thermal unit (mmBtu) will be eliminated. Additionally, India will save USD 0.30 per mmBtu on shipping charges as Qatar has agreed to take responsibility for shipping by converting the deal from Free on Board (FOB) to Delivered Ex Ship (DES).
With Brent crude oil prices at USD 80 per barrel, the annual cost of importing 7.5 million tonnes of LNG will amount to USD 3.9 billion. Over the 20-year contract period, the total cost will reach USD 78 billion, ensuring a stable and reliable supply of clean energy for India.
Petronet LNG Limited, India’s largest LNG importer, expressed its satisfaction with the agreement, highlighting its significance in achieving the Indian Prime Minister’s vision of making India a gas-based economy. The company also emphasized the energy security and economic development benefits that the deal will bring to India.
Furthermore, the new agreement allows Indian buyers to choose the terminal in India where LNG cargoes will be received, offering additional cost savings in transporting the fuel through pipelines within the Indian grid.
The signing of this long-term LNG agreement reinforces India’s commitment to clean energy and its role as a major player in the global energy landscape.
The government has successfully saved $6 billion on the renewal of the Qatar liquefied natural gas (LNG) deal. The new agreement, worth $78 billion, ensures a steady supply of LNG for the next 20 years. This cost-saving achievement will greatly benefit the country’s economy and energy security.
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