QatarEnergy and India’s Petronet LNG signed their biggest single deal for supplies of liquefied natural gas (LNG) on Tuesday, as India ramps up use of the fuel in a bid to curb emissions.
The deal will see Qatar supply 7.5 million metric tonnes per year of LNG to Petronet LNG on a delivered ex-ship basis (DES) from 2028 to 2048, according to a Petronet LNG statement.
Qatar, the world’s second largest LNG exporter, is pushing to play a larger role in Asia and Europe as competition from top supplier US increases. It plans to expand its liquefaction capacity to 126 million tonnes per year by 2027 from 77 million.
Tuesday’s agreement is a renewal of an existing deal expiring in 2028 in which Petronet LNG imports 7.5 million metric tonnes per year of LNG from Qatar on a free-on-board (FOB) basis, priced at a slope of 12.67 per cent of the current Brent crude oil futures prices and a fixed charge of 52 cents per million British thermal units (mmBtu).
Petronet LNG’s statement did not say if the pricing terms for the renewed deal are the same.
Offtakers of the LNG volumes are GAIL (India) Limited, Indian Oil Corporation Limited and Bharat Petroleum Corporation Limited, who will take supplies of the super-chilled fuel at a 60:30:10 ratio respectively after it is regassified at Petronet’s Dahej import terminal, said Petronet LNG.
Petronet LNG, India’s top gas importer, supplies gas that is mostly procured under long-term deals with Qatar and Australia to Indian energy companies for sale to end-users. These companies also have booked capacity at Dahej to directly import gas.
Petronet LNG chief executive Akshay Kumar Singh said in the statement that its existing long-term agreement with QatarEnergy accounts for around 35 per cent of India’s LNG imports.
India imported 10.6 million tonnes of LNG from Qatar in 2023, about half of India’s total LNG imports of 20.8 million tonnes last year, according to data from LSEG.
India wants to raise the share of natural gas in its energy mix to 15 per cent by 2030, up from 6.2 per cent currently, as part of an effort to cut planet-warming emissions.
“We are here to serve the market in India and we hope to be part of the expansion of the economy and requirements and the energy sector,” said Qatar’s energy minister Saad al-Kaabi, who is also QatarEnergy’s CEO, on the sidelines of India Energy Week event in Goa on Tuesday.
He said Qatar was “talking to a lot of our colleagues in Indian companies about new deals.”
Reuters earlier reported citing three sources that Petronet LNG would sign the deal with Qatar. One of the sources said that the fixed charge for Qatari LNG will not be in the renewed deal.
Petronet is also expected to sign a separate deal for LNG supplies on a delivered basis, all three of the sources said.
Qatar aims to expand its liquefaction capacity to 126 million tonnes per year by 2027 from 77 million tonnes per year and has signed long-term deals with European majors Shell, TotalEnergies and ENI.