February 24, 2024
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OIL & GAS

Qatar Energy Nears Long-Term LNG Deal with India

Qatar Energy is reportedly on the verge of finalizing a long-term agreement to supply liquefied natural gas (LNG) to Indian buyers, offering more favorable terms compared to existing contracts, according to a Reuters report on Friday.

Trade sources indicate that the Indian companies and Qatar Energy have reached an agreement on terms, with the potential contract expected to be signed by the end of this month or in early February.

The new deal is anticipated to feature destination-flexible cargoes and lower pricing, extending until at least 2050, potentially supporting India’s goal of increasing the share of natural gas in its energy mix to 15% by 2030 from the current 6.3%.

The impending agreement is crucial for India, given its objective to boost the use of LNG. The deal could play a role in meeting Prime Minister Narendra Modi’s ambitious targets for transforming the country’s energy landscape. Notably, the agreement is set to extend existing contracts, expiring in 2028, which involve the supply of 8.5 million metric tons per year (tpy) of LNG to Indian buyers.

Qatar Energy’s expansion plans align with the increased demand for LNG in Asia and Europe, especially amid rising competition from U.S. suppliers. Last year, Qatar secured long-term agreements with European majors Shell, TotalEnergies, and ENI.

Qatari LNG is typically priced based on a slope or percentage of crude oil. Industry sources suggest that the finalized deal is expected to be priced at around a 12% slope of Brent per million metric British thermal units (mmBtu).

A source told Reuters a deal could be signed during an energy conference in India from Feb. 6-9.

The potential agreement highlights the flexibility and cost-effectiveness sought by Indian buyers, allowing them to choose the receiving terminal within India. This freedom to select the arrival terminal is seen as a strategic move that could result in cost savings for Indian buyers in pipeline transportation within the Indian grid.

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