The government is likely to ink a multi-billion-dollar agreement on Tuesday to extend LNG imports from Qatar until 2048, with rates anticipated to be lower than current prices, according to sources.
The deal will be signed between Petronet LNG Ltd and QatarEnergy during India Energy Week in Betul, Goa.
Currently, Petronet imports 8.5 million tonnes of LNG annually from Qatar under two contracts, one of which is set to expire in 2028. This agreement is being extended for an additional 20 years. The second contract, for 1 million tonne per year, will be negotiated separately.
India, the world's third-largest energy consumer, views natural gas as a transitional fuel in its journey towards achieving net zero carbon emissions by 2070. The government aims to increase the share of natural gas in the country's energy mix to 15 percent by 2030, up from the current 6.3 percent.
Sources reveal that the new contract's pricing structure will be linked to the prevailing Brent crude oil prices, with a significant reduction in the fixed charge component. Additionally, Qatar has agreed to convert the deal from Free on Board (FOB) to Delivered Ex Ship (DES), thus assuming responsibility for shipping, resulting in savings of USD 0.30 per mmBtu on shipping costs.
Furthermore, the new agreement will grant Indian buyers the flexibility to select the terminal in India where the LNG cargoes will be received, as opposed to the existing arrangement where deliveries are made to Dahej in Gujarat. This flexibility is expected to reduce pipeline transportation costs within the Indian grid.'
(With PTI inputs)
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