India is poised to sign a significant $78 billion deal to extend its liquefied natural gas (LNG) imports from Qatar until 2048, at rates lower than the current prices, according to sources familiar with the matter.
The deal, to be inked by Petronet LNG Ltd, India’s largest LNG importer, and QatarEnergy, aims to extend the import of 7.5 million tonnes of LNG per year. This agreement, which is expected to be finalized on the sidelines of India Energy Week, will see a substantial reduction in prices compared to the existing contract.
Petronet LNG Ltd currently imports 8.5 million tonnes of LNG annually from Qatar through two separate contracts. The first of these contracts, set to expire in 2028, is being extended for an additional 20 years. The second contract, involving 1 million tonnes per year and initiated in 2015, will undergo separate negotiations.
Natural gas plays a crucial role in India’s energy transition strategy, with the country targeting a 15% share of natural gas in its energy mix by 2030, up from the current 6.3%. This move is part of India’s commitment to achieving net-zero carbon emissions by 2070.
The terms of the new contract include adjustments such as scrapping the fixed charge of USD 0.5 per million British thermal unit and transitioning from Free on Board (FOB) to Delivered Ex Ship (DES) terms, with Qatar taking responsibility for shipping. These adjustments are expected to result in significant savings for India, including savings on shipping costs and flexibility in choosing the arrival terminal within the Indian grid, which will reduce pipeline transportation costs.
The deal underscores India’s commitment to securing a stable and cost-effective energy supply as it navigates its energy transition journey.
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