QatarEnergy and India's Petronet sign biggest LNG deal to date

QatarEnergy and India’s Petronet LNG signed their biggest single deal for supplies of liquefied natural gas (LNG) on Tuesday, as India ramps up use of the fuel in a bid to curb emissions.

The deal will see Qatar supply 7.5 million metric tonnes per year of LNG to Petronet LNG on a delivered ex-ship basis (DES) from 2028 to 2048, according to a Petronet LNG statement.

Qatar, the world’s second largest LNG exporter, is pushing to play a larger role in Asia and Europe as competition from top supplier US increases. It plans to expand its liquefaction capacity to 126 million tonnes per year by 2027 from 77 million.

Tuesday’s agreement is a renewal of an existing deal expiring in 2028 in which Petronet LNG imports 7.5 million metric tonnes per year of LNG from Qatar on a free-on-board (FOB) basis, priced at a slope of 12.67 per cent of the current Brent crude oil futures prices and a fixed charge of 52 cents per million British thermal units (mmBtu).

Petronet LNG’s statement did not say if the pricing terms for the renewed deal are the same.

Offtakers of the LNG volumes are GAIL (India) Limited, Indian Oil Corporation Limited and Bharat Petroleum Corporation Limited, who will take supplies of the super-chilled fuel at a 60:30:10 ratio respectively after it is regassified at Petronet’s Dahej import terminal, said Petronet LNG.

Petronet LNG, India’s top gas importer, supplies gas that is mostly procured under long-term deals with Qatar and Australia to Indian energy companies for sale to end-users. These companies also have booked capacity at Dahej to directly import gas.

Petronet LNG chief executive Akshay Kumar Singh said in the statement that its existing long-term agreement with QatarEnergy accounts for around 35 per cent of India’s LNG imports.

Qatar aims to expand its liquefaction capacity to 126 million tonnes per year by 2027 from 77 million tonnes per year and has signed long-term deals with European majors Shell, TotalEnergies and ENI.