India and Qatar to boost economic ties; sign defence pact
10 Nov 2008
India and Qatar have set up a $100-million joint investment fund and signed deals in the fields of defence, security, energy and the wider economy.
The $100-million fund, with equal equity from India and Oman, will invest in sectors like infrastructure, tourism, health, telecom, utility and urban infrastructure and other sectors of either countries as may be mutually agreed upon.
Prime minister Manmohan Singh, on the last leg of his three-day Gulf tour, held extensive discussions with Qatar prime minister Sheikh Hamad Bin Jassem Bin Jabor Al Thani to enhance existing ties of cooperation in the fields of energy, economy and trade.
The two discussed ways to upgrade the energy deal between the two sides from a buyer-seller relationship to a more sustainable relationship involving investments and a long-term partnership.
India has sought an additional 5 million tonnes of liquefied natural gas from Qatar to meet its growing energy needs and has proposed to set up a gas-fired fertiliser plant in the Gulf country.
India will buy the urea, phosphate, ammonia and sulphur from Qatar on a long-term basis.
India imports 7.5 million tonnes of liquefied natural gas (LNG) annually from Qatar.
In fact, Qatar has been the most reliable partner for India when it agreed to supply 1.5 million tonnes more of LNG on a short-term contract to restart the beleaguered Dabhol power plant in Maharasthra.
Under the defence agreement, the two countries have agreed to set up a structure for joint maritime security and training as well exchange of visits while the agreement on security and law enforcement deals with common threat perceptions and sharing of intelligence data.
The two sides also reviewed a number of regional and international issues of mutual concern.
Qatar will ship an additional 2.5 million tonnes of LNG to India beginning January under the long term contract.
A mega petrochemical project is also proposed to be set up jointly by the Gas Authority of India Ltd (GAIL) along with Reliance Industries in Qatar. Doha, however, had made no commitments, saying all its current production was tied up.
The fertiliser project and the petrochemical plants will, however, be taken up only after additional gas is available from offshore in 2011.
Qatar's RasGas currently charges an FOB price of $2.53 per million British thermal units. The five-year fixed price period will end in January when the price will move to a price band linked to Japanese crude cocktail (JCC).
From January, the FOB price will move up to $3.12 per mmBtu. Together with shipping cost, import duty, regassification charges, pipeline tariff, marketing margin and sales tax, the delivered price would be $5.5188 per mmBtu in January.
The ex-terminal price of RasGas LNG currently works out to around $3.86 per mmBtu.
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