India, Qatar revive LNG deal with new 20-year term contract
07 Feb 2024
India and Qatar on Tuesday announced the signing of a fresh 20-year contract under which Qatar will supply 7.5 million tonnes of liquefied natural gas (LNG) to India annually for 20 years. The two sides are reported to have arrived at a revised price for the fresh contact, which will total $78 billion over the 20-year period.
Under the terms of the contract signed between Qatar Energy and Petronet LNG Limited, Qatar Energy will deliver a total 7.5 million tonnes per annum (MTPA) of LNG to ports in India using Qatar Energy’s LNG fleet, starting May 2028.
While Petronet did not reveal the gas price arrived at in the new agreement, the current rate it pays for LNG from Qatar is 12.67 per cent of the prevailing Brent crude price, with a fixed component of $0.52 per mBtu. At $80 per barrel Brent, annual imports of 7.5 million tonnes of LNG will cost $3.9 billion, and $78 billion over the 20-year period
The SPA was signed on the sidelines of the India Energy Week 2024, being held at Betul, Goa.
GAIL will pick up 60 per cent of the imported LNG, while Indian Oil Corporation and Bharat Petroleum Corporation will share the remaining on a 30:10 ratio.
“This agreement is another key milestone in the long-standing energy partnership between Qatar and India and comes on the heels of the 20th anniversary of the first LNG shipment to India,” Saad Sherida Al-Kaabi, Quatar’s minister of state for energy affairs and president and CEO of Qatar Energy, said.
“We believe that this new agreement, with our valued customers Petronet LNG and its esteemed shareholder companies, will further strengthen the relationship with India and support its vision to increase the contribution of natural gas in its energy mix,” Al-Kaabi added.
The long-term agreement will account for around 35 per cent of India’s LNG imports and will provide energy security by ensuring a stable and reliable supply of clean energy, Petronet MD and CEO Akshay Kumar Singh, said.
Petronet had, in 1999, signed an agreement with RasGas (which has since been merged with Qatar Energy), for import of 7.5 MTPA of LNG, which was followed by another agreement for import of an additional one million tonnes of LNG in 2015, taking the total to 8.5 MTPA.
Supplies under the contract are to end in 2028 and the new 20-year contract will commence in 2028 and run till 2048, with LNG delivered on Delivered Ex-Ship (DES) basis, as per the revised agreement.
