Petronet LNG, QatarEnergy extend key LNG supply deal by another 20 years beyond 2028
- Petronet LNG and QatarEnergy have finalized a significant deal to extend the supply of liquefied natural gas (LNG) beyond the current contract expiration date.
- The contract extends the supply of 7.5 million tonnes per annum (mtpa) of LNG for an additional 20 years, starting from 2028.
Negotiation Process and Contractual Terms
- The negotiation process involved discussions between the governments of India and Qatar
- Under the new agreement, LNG supplies will transition from a Free On Board (FOB) basis to Delivered Ex Ship (DES) basis, with no fixed charge mentioned.
- The pricing terms under the new contract are expected to result in significant savings for Indian buyers,
- Potentially saving around $6 billion over the 20-year period.
Impact on India's Energy Goals
- The extension of the contract aligns with India's aim to increase the share of natural gas in its primary energy
- Mix to 15 per cent by 2030 with little over 6 % at present.
Importance of the Contract
- The existing long-term agreement holds national importance, accounting for approximately 35 per cent of India's LNG imports.
- Qatar remains the largest exporter of LNG to India, accounting for over half of India's LNG imports.
- India's LNG imports from Qatar play a significant role in its economy, with LNG imports alone valued at $8.32 billion in FY23.
Environmental Considerations
- Natural gas is viewed as a cleaner alternative to conventional petroleum fuels, aligning with India's energy transition objectives.
- The extension of the contract ensures continued LNG supplies to various sectors, facilitating India's energy security and economic development.
Prelims Takeaway
- DES Basis
- LNG Imports of India