India's energy security with West Asian countries has evolved from mere buyer-seller relationships to comprehensive strategic partnerships. West Asia supplies about 90 per cent of its crude oil and 47 per cent of its natural gas, primarily from the Gulf Cooperation Council (GCC) states.
On 6 February 2024, India signed a $78 billion deal to extend LNG imports from Qatar by another 20 years till 2048. In a bid to secure India's long-term energy security, India's Petronet LNG signed a pact with QatarEnergy to extend the deal to buy 7.5 million tonnes per annum (MTPA) of liquefied natural gas (LNG).
The deal signed on the sidelines of India Energy Week (IEW) in Betul, Goa, was a renewal of an existing 1999 deal set to expire in 2028 in which Petronet LNG imports 7.5 million metric tonnes per year of LNG from Qatar. The existing deal was signed on 31 July 1999 to supply 7.5 MMTPA.
What is the LNG deal between India and Qatar?
India and Qatar, on 6 February 2024, signed a 20-year agreement worth $78 billion to extend the supply of 7.5 million tonnes per annum (MTPA) of LNG to India from 2028 till 2048.
What are the key changes in the India-Qatar LNG deal renewed in 2024?
The renewal of the deal comes at 'significantly' lower prices compared to the existing 1999 contract. The new deal shows removal of the fixed charge of $0.52 per million British thermal unit (mmBtu) in the old contract.
Under this new contract, India is also expected to save an additional $0.30 per mmBtu on shipping charges, amounting to a $6 billion saving on transportation and shipping. The new deal transitions from a Free on Board (FOB) arrangement to a Delivered Ex-Ship (DES) basis, resulting in QatarEnergy bearing the cost of shipping the fuel to India.
The renewed LNG deal offers flexibility in port selection which allows India to choose the receving terminal. The old agreement stipulated delivery of the fuel to Dahej, Gujarat port only.
What is the significance of the 20-year LNG supply agreement signed with Qatar in 2024 for India’s energy security?
As the world's third largest energy consumer, the renewal of India-Qatar LNG deal by another 20 years (2028 to 2048) ensres a stable, long-term supply of cleaner fuel.
The India-Qatar 20-year LNG deal renewed in 2024 helps secure about 40 per cent of India's LNG imports.
The supplied LNG will be crucial for producing electricity, fertiliser production, and petrochemical industries.
The deal also supports India's aim to increase the share of natural gas in the country's energy basket to 15 per cent by 2030 from 6.3 per cent now.
India views natural gas as a transition fuel and critical for country's energy mix. This LNG deal will also aid India in reaching its 2070 net-zero emission goal.
The renewed LNG deal is estimated to save India about $6 billion in transportation costs over the 20-year period.
Also read: Which countries are part of the India–Middle East–Europe Economic Corridor?
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