India has renewed its liquefied natural gas (LNG) import deal with Qatar, extending it for another 20 years till 2048. The deal, valued at USD 78 billion, was signed by Petronet LNG Ltd and QatarEnergy to purchase 7.5 million tonnes of gas annually for various purposes including electricity generation, fertilizer production, and CNG conversion. The renewal, negotiated during the India Energy Week, comes at a significantly lower price than the current deal, resulting in savings of approximately USD 6 billion over the contract period.
Renewal Terms and Negotiations
Under the new agreement, the first 25-year deal set to expire in 2028 has been extended for an additional 20 years. Intense negotiations took place over the past few months to finalize the renewal terms, amidst heightened tensions following a controversial court ruling in Qatar.
Importance of the Deal
India views natural gas as a crucial transition fuel towards achieving net-zero carbon emissions by 2070. With plans to increase the share of natural gas in its energy mix to 15% by 2030, the renewed Qatar gas deal plays a significant role in India’s energy security and sustainable economic development.
Financial Implications
The current deal is priced at a lower rate compared to the previous one, resulting in substantial savings for India. The removal of a fixed charge and a shift to a new pricing mechanism will further contribute to cost efficiency. Additionally, Qatar’s agreement to handle shipping responsibilities will save India an additional USD 0.30 per mmBtu on shipping charges.
Operational Details
The LNG supplies under the new agreement will be received on a delivered basis, commencing from 2028 onwards. Major Indian companies, including GAIL (India), Indian Oil Corporation, and Bharat Petroleum Corporation Limited, will off-take LNG volumes primarily from the Dahej terminal of Petronet LNG.
Conclusion
The renewal of the Qatar gas deal is a significant milestone for India’s energy sector, ensuring stable and reliable access to clean energy sources. It reflects India’s commitment to transitioning towards cleaner fuels and aligns with its long-term energy goals. Additionally, the deal underscores the importance of strategic partnerships in advancing energy security and economic development.
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