India Secures $6 Billion Savings on Renewed Qatar LNG Deal, Inks $78 Billion Pact for 20 Years

In a significant development, India has finalized a groundbreaking $78 billion deal with Qatar to extend liquefied natural gas (LNG) imports for another two decades until 2048. The pact, signed by Petronet LNG Ltd, India's largest LNG importer, offers rates lower than current prices and is expected to result in substantial savings for the country.

The deal, signed on the sidelines of India Energy Week (IEW) in Betul, Goa, will see Petronet LNG continue to purchase 7.5 million tonnes of gas annually from QatarEnergy. The imported LNG will be utilized for electricity generation, fertilizer production, and conversion into compressed natural gas (CNG).

Sources reveal that the renewed agreement comes at a significantly lower price compared to the existing deal, translating into savings of approximately $6 billion over the 20-year contract period. At current prices, India stands to save about $0.8 per million British thermal units under the renewed terms.

Petronet LNG currently imports 8.5 million tonnes of LNG from Qatar under two contracts. The first 25-year deal, set to expire in 2028, has now been extended for an additional 20 years. The second deal, involving 1 million tonnes per annum and initiated in 2015, will be negotiated separately.

The renewal deadline for the 1999 deal, covering 7.5 million tonnes per annum, was December 2023. Intensive negotiations took place over the past few months, marked by heightened tensions following the sentencing of eight former Indian Navy officials to death by a Qatar court in October, subsequently reduced at the end of December.

India, as the world's third-largest energy consumer, considers natural gas a crucial transition fuel in achieving net-zero carbon emissions by 2070. As part of this strategy, the government aims to increase the share of natural gas in the country's energy mix to 15% by 2030, up from the current 6.3%.

Under the new contract, the pricing structure remains largely consistent with the existing deal, but with the elimination of a fixed charge of $0.52 per million British thermal units. Additionally, a shift from Free on Board (FOB) to Delivered Ex Ship (DES) by Qatar is expected to save India an additional $0.30 per mmBtu on shipping charges.

The LNG sales and purchase agreement ensures energy security for India, with major consumers like fertilizers, compressed natural gas, refineries, petrochemicals, power, and other industries benefiting from continued and stable LNG supplies. Petronet CEO Akshay Kumar Singh emphasized that the renewal is a significant step toward realizing the vision of making India a gas-based economy and achieving greater economic development.