- India has renewed a 1999 contract for shipping gas from Qatar for another 20 years, leading to estimated savings of $6 billion over the extended period.
- Petronet-LNG, India’s largest gas importer, and QatarEnergy signed the agreement to extend the contract, which expires in 2028, for importing 7.5 million tonnes of LNG annually for an estimated $78 billion.
- The contract with QatarEnergy accounts for 35% of India’s total gas imports, and India meets 40% of its gas needs through imports.
- Under the revised contract, the fixed charge has been scrapped, while the slope (per cent of current Brent crude futures rates) largely remains the same as before.
- QatarEnergy will now bear the shipping cost, delivering gas at the port designated by Petronet under a delivered basis (DES) arrangement, compared to the previous free on board (FOB) arrangement where the buyer arranged shipping.
- The renewed contract reflects India’s rising influence as a pivot of global energy demand growth, allowing Indian negotiators to drive a hard bargain.
- Negotiations coincided with strained bilateral ties after a Qatari court handed death sentences to eight former Indian Navy officials on spying charges for Israel, seen as Doha’s attempt to influence the negotiations.
- India took a tough stance during negotiations as Qatar sought buyers amid rising US supplies to Europe limiting its marketing options for expanded liquefaction capacity.