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India has clinched a monumental USD 78 billion deal to extend liquefied natural gas (LNG) imports from Qatar for another 20 years, until 2048, at rates lower than current prices. Petronet LNG Ltd, the nation's largest LNG importer, announced the agreement with QatarEnergy to purchase 7.5 million tonnes of gas annually for electricity generation, fertiliser production, and CNG conversion.
The deal, signed during the India Energy Week (IEW), represents significant savings for India, with the renewal secured at a "significantly" lower price than the existing contract. At current rates, India is expected to save approximately USD 0.8 per million British thermal units (mmBtu) under the renewed terms, translating to savings of USD 6 billion over the contract period.
Under the agreement, Petronet LNG imports 8.5 million tonnes per annum (MTPA) of LNG from Qatar, with the first 25-year deal set to expire in 2028. This contract has now been extended for an additional 20 years. The second deal for 1 MTPA, initiated in 2015, will undergo separate negotiations.
Previously, the renewal deadline for the 1999 deal, covering 7.5 MTPA, was December 2023. Intense negotiations took place between the two sides over the past few months amid heightened tensions following a Qatar court's sentencing of eight former Indian Navy officials to death in October, allegedly for spying for Israel.
The new agreement eliminates the fixed charge of USD 0.52 per mmBtu and shifts the shipping responsibility from Free on Board (FOB) to Delivered Ex Ship (DES), resulting in additional savings of USD 0.30 per mmBtu on shipping charges. At a USD 80 per barrel Brent crude oil price, the annual cost of the 7.5 MTPA import would amount to USD 3.9 billion, totalling USD 78 billion over 20 years.
The renewal of the LNG Sales and Purchase Agreement (SPA) between Petronet LNG and QatarEnergy ensures India's energy security and the continued supply of regasified LNG to major sectors like fertilisers, CGD, refineries, petrochemicals, power, and other industries.
Akshay Kumar Singh, CEO of Petronet, hailed the agreement as a significant step towards Prime Minister Narendra Modi's vision of transforming India into a gas-based economy. The deal is poised to bolster energy security, ensure a stable and reliable clean energy supply, and contribute to India's economic development.
Moreover, the new deal provides Indian buyers with the flexibility to choose the terminal for LNG delivery within India, allowing for additional cost savings in fuel transportation through domestic pipelines.
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