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Qatar will supply India 7.5 million tons per annum (MMtpa) of LNG for 20 years under a deal signed between QatarEnergy and the South Asian country’s Petronet LNG Ltd. (PLL).
Under the agreement inked between the state-owned companies, “the contracted LNG volumes from Qatar will be delivered ex-ship to terminals across India onboard QatarEnergy’s vast LNG fleet starting May 2028”, QatarEnergy said in a news release.
Qatari Energy Affairs Minister Saad Sherida Al-Kaabi, who is also QatarEnergy chief executive, said in a statement, “this agreement is another key milestone in the long-standing energy partnership between Qatar and India and comes on the heels of the 20th anniversary of the first LNG shipment to India”.
Petronet, a flagship company tasked with importing LNG for regasification and distribution in India, first entered into an agreement to import LNG from Qatar in 1999, for 7.5 MMtpa, recalled QatarEnergy, which has renamed from Qatar Petroleum since 2021. Petronet added 1.0 MMtpa to the volume in an agreement penned 2015, QatarEnergy said.
The 1999 agreement, under which supply is delivered free on board, expires 2028, Petronet said in a separate announcement of the new 20-year, 7.5 MMtpa agreement executed in India.
“The existing long-term agreement between Petronet LNG and QatarEnergy today accounts for around 35 percent of India’s LNG imports and is of national importance”, Petronet managing director and chief executive Akshay Kumar Singh said in a statement. “Renewal of this agreement is a step towards achieving vision of honorable prime minister of India [Narendra Modi] to make India a gas-based economy and increase share of natural gas in India’s primary energy basket to 15 percent by year 2030”.
The new volumes will “assure continued supplies of regasified LNG to major consuming sectors like fertilizers, CGD [city gas distribution], refineries and petchem, power and other industries”, said Petronet.
“Similar to earlier agreement of 1999, the LNG volumes under the new SPA shall also be offtaken by GAIL (India) Ltd. (60 percent), Indian Oil Corp. Ltd. (30 percent) and Bharat Petroleum Corp. Ltd. (10 percent) after regasification primarily from Dahej Terminal of PLL on substantially back to back basis”, the Indian announcement stated. The three companies are among Petronet’s four equity holders, which own 12.5 percent each of Petronet’s share capital.
Qatar is among the world’s biggest LNG exporters alongside Australia, Russia and the United States. It had held the top spot for years until Australia overtook it 2021, when the Gulf state exported about 3.8 trillion cubic feet (106.8 billion cubic meters) according to BP PLC’s 2022 annual statistical review of the energy market.
Qatar has bagged long-term LNG supply contracts for several countries in Europe and Asia with different energy companies since the energy trade disruption that has resulted from Russia’s invasion of Ukraine 2022.
Last November QatarEnergy said it signed another offtake deal with China Petrochemical Corp. (Sinopec) for 3.0 MMtpa of LNG from the two North Field expansion projects offshore Qatar. The agreement in Shanghai increases China’s purchase commitment to the projects to 7.0 MMtpa following an earlier one signed 2022 between the state-owned companies for the North Field East expansion project. Both agreements last 27 years.
In October QatarEnergy announced a 27-year agreement with Eni SPA to supply up to 1.0 MMtpa of LNG from the East project to Italy. Eni is a partner in the East project with a 3.125 percent share.
Earlier that month QatarEnergy announced two agreements with Shell PLC for up to 3.5 MMtpa for 27 years. The supply is meant for the Netherlands and to be sourced from the East project, where the British energy major holds 6.25 percent ownership. Shell also holds 9.375 percent in the South project.
The same month QatarEnergy bared two agreements to supply TotalEnergies SE with a maximum of 3.5 MMtpa for 27 years, to be sourced from the two expansion projects and for distribution in France. The French energy giant holds a 6.25 percent share in North Field East, planned to produce 32 MMtpa, and 9.375 percent in North Field South, designed with a 16 MMtpa capacity.
QatarEnergy will begin delivery for the LNG supply for France, Italy and the Netherlands in 2026, according to QatarEnergy’s announcements of the agreements.
In Asia, besides China and India, QatarEnergy signed last June an agreement to sell about 1.8 MMtpa to Bangladesh with delivery starting 2026. The agreement with Bangladesh Oil, Gas and Mineral Corp. covers 15 years. Qatar already delivers over 3.5 MMtpa of LNG to the South Asian nation.
Key to Qatar’s LNG foothold is the 2.3-square mile North Field, discovered 1971. About half of Qatar’s land area, it is the largest gas field in the world, according to QatarEnergy. It has averaged over 700 million cubic feet per day in gas production, QatarEnergy says on its website.
QatarEnergy had already awarded the engineering and procurement contracts for both expansion projects and last October announced the start of construction.
The east and south expansions will raise Qatar’s LNG production capacity to 126 MMtpa by 2026, according to the company.
To contact the author, email jov.onsat@rigzone.com
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