The agreement entails an extension of the current pact between India’s largest LNG importer, Petronet LNG Ltd, and QatarEnergy for another 20 years until 2048. This move comes as part of India’s $78-billion liquefied natural gas (LNG) deal with Qatar, aimed at boosting the adoption of clean fuel within the country.
The current sale and purchase agreement, signed in July 1999, is set to expire in 2028, with an annual supply of 7.5 million tonnes (mt). According to Petronet, under the new agreement, LNG supplies will be delivered on a DES (delivered) basis starting from 2028 until 2048.
The agreement, inked during India Energy Week (IEW) in Betul, Goa, involves rates that are lower than the prevailing prices. According to a PTI report, the supplies will be provided at “substantially” reduced prices, potentially saving India around $0.8 per million British thermal unit (mBtu), equating to a total savings of $6 billion throughout the duration of the contract. Additionally, India and Qatar had previously signed another deal to supply one million tonnes of LNG annually in 2025, with separate negotiations underway.
Although Petronet did not disclose the price in the updated agreement, it currently procures gas from Qatar at 12.67% of the prevailing Brent crude price along with a fixed component of $0.52 per mBtu. The revised deal eliminates the fixed component. Furthermore, India will benefit from an additional saving of $0.30 per mBtu on shipping charges, as Qatar assumes responsibility for shipping by transitioning the deal from free on board (FOB) to delivered (DES).
At a Brent crude price of $80 per barrel, annual imports of 7.5 million tonnes will amount to $3.9 billion, totaling $78 billion over a 20-year span. Subsequent to regasification at Petronet’s Dahej Terminal, GAIL will acquire 60% of the LNG, while Indian Oil Corporation will take 30%, and Bharat Petroleum Corporation Ltd will take 10%.
Petronet stated that the agreement would bolster India’s energy security by ensuring continued supplies of regasified LNG to key consuming sectors, including fertilizers, city gas distribution, refineries, petrochemicals, power generation, and other industries.
“The current long-term agreement between Petronet LNG and QatarEnergy constitutes approximately 35% of India’s LNG imports and holds significant national significance,” remarked Akshay Kumar Singh, MD & CEO of Petronet LNG Ltd.
He further added, “This agreement will bolster energy security, ensuring a consistent and dependable supply of clean energy, thereby supporting India’s efforts towards enhanced economic development.”
