News Brief
Here's How Extending LNG Contract With Qatar Will Help India Fulfilling Its Sustainable Energy Needs
An LNG terminal. (Representative Image)
India is on the brink of finalising a pivotal gas deal with Qatar, set to extend the supply of 7.5 million tonnes per annum (mtpa) of liquefied natural gas (LNG) for an additional 20 years beyond 2028, according to a report from The Indian Express.
India depends heavily on LNG imports to fulfill approximately half of its gas demand. To increase the share of natural gas in its primary energy mix to 15 per cent by 2030, securing a reliable and affordable LNG supply from Qatar becomes imperative.
This agreement, expected to be formalised during the India Energy Week event in Goa, holds significant implications for India's energy security.
The renewed contract is poised to offer India several strategic advantages.
Firstly, it is anticipated to come at a reduced price compared to the existing deal, providing cost savings for the nation.
Under the present contract terms, LNG is priced based on a slope of 12.67 per cent of Brent crude oil futures and a fixed charge.
However, the renewed agreement may see the exclusion of the fixed charge, potentially lowering the overall cost of LNG imports for India.
Additionally, the shift to delivered ex-ship (DES) deliveries, as opposed to free on board (FOB) basis, is expected to streamline logistics and further reduce costs.
Qatar, as the world's leading exporter of LNG, plays a crucial role in India's energy landscape, supplying over half of the country's imports.
In FY23 alone, India imported 10.74 million tonnes of LNG from Qatar, valued at $8.32 billion.
This dependency underscores the significance of securing a favourable long-term contract with Qatar to ensure a stable and uninterrupted natural gas supply.
Moreover, natural gas is increasingly recognised as a cleaner and more sustainable alternative to conventional petroleum fuels, aligning with India's broader goals of reducing emissions and transitioning towards a greener energy future.
Given India's high crude oil import dependency, the importance of diversifying its energy sources cannot be overstated, making LNG imports from Qatar a strategic imperative.
In conclusion, the extension of the LNG contract with Qatar not only enhances India's energy security but also contributes to its broader energy transition objectives.
By securing a reliable and cost-effective LNG supply, India is well-positioned to meet its growing energy needs while simultaneously advancing towards a more sustainable and environmentally friendly energy ecosystem.
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