QatarEnergy and Petronet LNG of India have inked their most significant agreement for the supply of liquefied natural gas (LNG), marking a pivotal step as India seeks to reduce emissions by increasing its use of the fuel. The Long-Term LNG Sale and Purchase Agreement was formally signed on Tuesday between Petronet LNG, India’s state-run oil and gas company, and Qatar Energy.
The agreement, sealed by India’s Union Petroleum Minister Hardeep Singh Puri and Qatar’s Minister of State for Energy Affairs and CEO of Qatar Energy, Saad Sherida Al-Kaabi, outlines the provision of 7.5 million metric tons of LNG per year to Petronet LNG on a delivered ex-ship basis from 2028 to 2048, against FOB (free on board) arrangement, where buyer arranges shipping, in the existing contract.
Union Minister Puri expressed optimism about the contract, stating that it would propel India towards energy self-sufficiency and align with the country’s goal to raise the share of gas in its energy mix from 6% to 15% by 2030. He highlighted the significance of transitioning to a gas-based economy under the visionary leadership of Prime Minister Narendra Modi.
India imported 10.6 million tons of LNG from Qatar in 2023, about half of India’s total LNG imports of 20.8 million tons last year, according to data from LSEG. India wants to raise the share of natural gas in its energy mix to 15% by 2030, up from 6.2% currently, as part of an effort to cut planet-warming emissions.
Qatar, the world’s second largest LNG exporter, is pushing to play a larger role in Asia and Europe as competition from top supplier U.S. increases. The agreement signifies a renewal of an existing deal set to expire in 2028, wherein Petronet LNG currently imports 7.5 million metric tons of LNG annually from Qatar. The pricing terms for the renewed deal were not disclosed in Petronet LNG’s statement.
The off-takers for the LNG volumes are GAIL (India) Limited, Indian Oil Corporation Limited, and Bharat Petroleum Corporation Limited, who will receive supplies at a ratio of 60:30:10 after regasification at Petronet’s Dahej import terminal.
Petronet LNG’s CEO, Akshay Kumar Singh, highlighted that the existing long-term agreement with QatarEnergy constitutes approximately 35% of India’s LNG imports. In 2023, India imported 10.6 million tons of LNG from Qatar, contributing to half of the country’s total LNG imports.
Qatar’s Minister of State for Energy Affairs, Saad Al-Kaabi, emphasized India’s potential for green energy and expressed Qatar’s commitment to serving the Indian market, hoping to contribute to the expansion of the economy and energy sector.
While details about pricing terms remain undisclosed, it is reported that Petronet LNG is expected to sign a separate deal for LNG supplies on a delivered basis. Qatar aims to expand its liquefaction capacity to 126 million tons per year by 2027 from the current 77 million tons per year. The signing took place during the India Energy Week event in Goa, where Minister Puri engaged with representatives from Gazprom Neft, Petronas, and BP.
(Inputs from agencies)
