India has recently renewed the deal it had earlier to import liquefied natural gas or LNG from Qatar at low cost. This agreement has been renewed for the next 20 years. Considering the price of crude oil Brent crude at $80 per barrel, the gas imported under this agreement will save India about $6 billion.
During the ongoing India Energy Week, Petronet LNG, India’s largest gas importer, and Qatar Energy signed the contract renewal. The deal was initially supposed to expire in 2028. India will import approximately 7.5 million tonnes of LNG from Qatar during the term of the agreement. It will cost about 7 thousand 8 billion dollars.
India imports about 40 percent of its gas needs. Of the gas they import, 35 percent comes from Qatar Energy. Qatar Energy has been selling LNG to India since 2003-04. The price of this gas is fixed in two ways. First, a price structure was set such that an increase in Brent crude oil prices to $1 per barrel would increase LNG prices by 12.67 percent. Along with this, the gas price is set at 52 cents per MMBTU.
Sources told The Times of India that the fixed price issue has been dropped in the new deal, though the structure remains almost the same. In the existing contract, the responsibility of gas transportation is on the buyer, but in the new contract, India’s money will be saved. Because, from now on, Qatar Energy will deliver this gas to the designated port in India. This will save 0.8 Indian dollars per unit.
According to the news of the Times of India, the nature of this new agreement shows how much India’s influence in the global energy market has increased. India’s position as the world’s second largest oil importer has also impacted the gas market. That’s why they managed to make such a hard bargain after long negotiations.
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Interestingly, while these talks are going on, a Qatari court has sentenced eight former Indian Navy officers to death on charges of espionage for Israel. This was seen as an attempt by Doha to influence the talks.
But Qatar is in trouble as Europe’s LNG purchases from the United States increase. The change comes at a time when Qatar’s gas liquefaction capacity is expanding. Now their annual capacity is 77 million tons, which is expected to increase to 126 million tons in 2027. As a result, it became possible for India to negotiate strongly.
