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QatarEnergy to sell cheaper LNG to India’s Petronet

Saad Sherida Al Kaabi, Qatar's energy minister and CEO of QatarEnergy, which has extended its India supply contract to 2048 Noushad Thekkayil/NurPhoto via Reuters Connect
Saad Sherida Al Kaabi, Qatar's energy minister and CEO of QatarEnergy, which has extended its India supply contract to 2048
  • Deal for 7.5m tonnes a year
  • Importer could save $6bn
  • Qatar’s gas output rising

QatarEnergy has renewed its contract to supply 7.5 million tonnes per year of liquefied natural gas to Indian importer Petronet LNG.

The 20-year contract, which will begin in May 2028, is reportedly valued at $78 billion – significantly less than the agreement it will replace. 

Petronet could save around $6 billion over the contract term, according to reports in India, as Qatar works to find clients for its rising LNG output.

The terms of the new contract have not been released, but traders cited by Bloomberg say it is at roughly 12.2 percent of the prevailing Brent oil price, plus a fixed charge of around $0.30 per million British thermal units. 

The current deal, which began in 1999, is at 12.67 percent of Brent with a fixed charge of $0.52.

Under the 2028 agreement, the 7.5 million tonnes of LNG will be delivered directly to terminals across India via the QatarEnergy fleet.

Petronet has a separate deal with Qatar to import another 1 million tonnes per year of LNG, signed in 2015. 

India is emerging as one of the drivers of gas demand in Asia. Its LNG imports could increase by half by 2025, according to the International Energy Agency.

The country, which relies on coal for a high percentage of its energy mix, aims to raise the share of cleaner-burning natural gas to 15 percent by 2030, from about 6 percent today.

Qatar, the world’s third-largest LNG exporter, is increasing its output from 77 million tonnes per year to 126 million by 2027. It has found clients for around half the new supply. At the end of January, it signed an agreement to supply 1 million tonnes per year to Bangladesh.

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