India to sign multi-billion dollar deal to extend LNG imports from Qatar for 20 years

PTI, Feb 6, 2024, 11:45 AM IST

Representative image (Source: iStock)

Betul: India is likely to sign on Tuesday a multi-billion dollar deal to extend LNG imports from Qatar till 2048 at rates that are lower than current prices, sources said.

Petronet LNG Ltd will sign the deal with QatarEnergy to extend import of 7.5 million tonne a year on sidelines of India Energy Week here.

Sources said the price will be ”significantly’ lower than current price.

Petronet currently imports 8.5 million tonne a year of LNG from Qatar under two contracts. The first 25-year deal is to expire in 2028 and is now being extended for 20 additional years. The second deal for 1 million tonne a year entered into in 2015, will be negotiated separately, sources said.

India, the world’s third biggest energy consumer, sees natural gas as a transition fuel for migrating to net zero carbon emissions by 2070. As part of this, the government is targeting to raise the share of natural gas in the country’s energy mix to 15 per cent by 2030 from 6.3 per cent now.

Sources said the current deal is priced at 12.67 per cent of prevailing Brent crude oil prices plus USD 0.5 per million British thermal unit.

Under the new contract, while the slope would remain more or less the same, the fixed charge of USD 0.5 would be scrapped, they said.

Also, India will save USD 0.30 per mmBtu more than it incurs on shipping as Qatar has agreed to convert the deal to Delivered Ex Ship (DES) from Free on Board (FOB), thereby undertaking responsibility of shipping.

While 7.5 million tonne a year of LNG is bought by Petronet, the firm’s promoters Indian Oil Corp (IOC) , Bharat Petroleum and GAIL (India) buy a combined 1 million tonne a year of LNG.

Sources said the new deal will allow the Indian buyers to decide which terminal in India will receive cargoes. Under existing deals, Qatar delivers LNG at Dahej in Gujarat.

They said the freedom to decide on the arrival terminal will save on pipeline transportation costs within the Indian grid.