Connect with us

Hi, what are you looking for?

Business

India to sign $78 billion deal to extend Qatar LNG imports

It’s anticipated that Betul (Goa), India is on the verge of finalizing a substantial USD 78 billion agreement to prolong LNG imports from Qatar for another 20 years until 2048, with rates anticipated to be lower than current prices, according to sources. Petronet LNG Ltd, India’s largest liquefied natural gas (LNG) importer, is expected to seal the deal with QatarEnergy during India Energy Week (IEW) in Goa.

Sources have indicated that the renewed agreement will be at a considerably reduced price compared to the existing one. At present rates, India could save approximately USD 0.8 per million British thermal unit under the renewed terms.

Petronet currently imports 8.5 million tonnes per year (MTPA) of LNG from Qatar under two contracts. The initial 25-year deal, set to expire in 2028, is now set to be extended for an additional 20 years. The second contract for 1 MTPA, signed in 2015, will be discussed separately, as per sources.

Qatar’s energy minister and top officials of QatarEnergy are expected to be present at the IEW event in India.

India, being the world’s third-largest energy consumer, views natural gas as a crucial transition fuel in its journey towards achieving net zero carbon emissions by 2070. To this end, the government aims to elevate the share of natural gas in the country’s energy mix to 15 per cent by 2030 from the current 6.3 per cent.

According to sources, the existing deal is priced at 12.67 per cent of prevailing Brent crude oil prices plus a fixed component of USD 0.52 per million British thermal unit. Under the proposed new contract, the pricing structure would remain largely unchanged, but the fixed charge of USD 0.52 would be eliminated.

Additionally, India is expected to save an extra USD 0.30 per mmBtu on shipping costs as Qatar has agreed to switch the contract terms from Free on Board (FOB) to Delivered Ex Ship (DES), thereby taking responsibility for shipping.

Based on a Brent crude oil price of USD 80 per barrel, the annual import of 7.5 MTPA will amount to USD 3.9 billion, totaling over USD 78 billion over a 20-year period.

While Petronet procures 7.5 MTPA of LNG, the company’s stakeholders – Indian Oil Corp (IOC), Bharat Petroleum, and GAIL (India) – collectively purchase 1 MTPA of LNG.

The new agreement will empower Indian buyers to choose the terminal in India where cargoes will be received, offering flexibility and potential cost savings in transporting the fuel through pipelines within the Indian grid, as per sources.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

Technology

Apple is gearing up for a significant refresh of its iPad lineup in 2024, starting with the anticipated launch of the iPad Pro in...

Business

Microsoft Teams had a major hiccup on Friday, causing disruptions and various issues for users. The problem started around 11 a.m. EST and quickly...

Business

JetBlue Airways is considering pulling out of its $3.8 billion acquisition of Spirit Airlines following a federal judge’s blockage of the deal in response...

Business

Tesla is pulling back nearly 200,000 cars in the U.S. over a glitch with the backup camera not kicking in when the car’s in...