India’s biggest LNG importer, Petronet LNG Ltd, extended a current pact with QatarEnergy by another 20 years till 2048.
The LNG importer, said in a statement that it has signed a pact with QatarEenergy to extend the deal by buying 7.5 million tonne a year of gas for further producing electricity, making fertilizers and converting it into CNG.
The deal was inked on the sidelines of the India Energy Week(IEW) in Betul, Goa.
“The renewal is at ‘significantly’ lower price than the current deal, at current prices India will save about USD 0.8 per million British thermal unit at the renewed terms, this translates into savings of USD 6 billion over the contract period”, sources affirmed.
Petronet imports 8.5 million tonne per annum(MTPA) of LNG from Qatar under two contracts. The first being a 25-year deal, which will expire by the year 2028 but has now been extended for 20 additional years. The second deal for 1 MTPA entered into the year 2015, and will be negotiated separately, sources said.
As per the 1999 deal for 7.5 MTPA, the renewal was to be agreed upon five years prior to the end of the supply term. That deadline was in December 2023.
The two sides were primarily engaged in intense negotiations over the last few months. There were heightened tensions when a Qatar court sentenced eight former Indian navy officials to death in October over espionage. At December-end, their sentence was reduced.
Qatar’s energy minister and top officials of QatarEnergy are currently attending the IEW in Goa.
India, the world’s third largest energy consumer, sees natural gas as a transition fuel for migrating to net zero carbon emissions by the year 2070.
As part of this, the government is targeting to raise the share of natural gas in the country’s energy mix to almost 15 per cent by the year 2030 from 6.3 per cent now.
“The current deal is priced at 12.67 per cent of prevailing Brent crude oil plus a fixed component of USD 0.52 per million British thermal unit”, sources said.
Under the new contract, the slope would remain more or less the same but the fixed charge of USD 0.52 would be scrapped, they confirmed.
In addition, India is likely to save an additional USD 0.30 per mmBtu on shipping charges as Qatar has agreed to convert the deal to Delivered Ex Ship(DES) from the Free on Board(FOB), thereby undertaking responsibility of shipping.
As USD 80 per barrel Brent crude oil price, the 7.5 MTPA import will cost USD 3.9 billion annually and over a 20-year period it would total to USD 78 billion.
Akshay Kumar Singh, CEO, Petronet said, “The existing long-term agreement between Petronet and QatarEnergy today accounts for around 35 per cent of India’s LNG imports and is utmost national importance”
“Renewal of this agreement is a step towards achieving Prime Minister Modi’s vision to make India a gas-based economy and increase share of natural gas in India’s primary energy basket to 15 per cent by the year 2030. This pact will provide energy security and ensure stable and reliable supply of clean energy security and ensure stable and reliable supply of clean energy and help India in it’s stride towards greater economic development”, he further added.
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