Qatar is seeking to sign record volumes of long-term sales contracts this year to expand its market share globally, particularly at Russia’s expense.
The Indian Government-backed gas supplier, GAIL, is in the final stages of closing a liquefied natural gas (LNG) supply deal with Qatar, according to industry insiders cited by Reuters.
This agreement will involve India purchasing at least 1 million metric tonnes of LNG per year from the world’s leading exporter, Qatar, and could extend for more than 20 years, said three industry and trade sources.
This comes after the announcement of Abu Dhabi’s ADNOC striking a 14-year deal valued between $7 billion to $9 billion with Indian Oil Corp to supply 1.2 million metric tonnes of LNG per year. That deal was finalised during Prime Minister Narendra Modi’s recent visit to the United Arab Emirates (UAE).
India’s pursuit of energy agreements is part of a broader strategy to ensure energy security as the nation strives for a high growth rate, eyeing its ambitious goal of becoming a developed economy in the coming decades.
The deal with Qatar would align with GAIL’s plans to diversify its gas imports and hedge against potential supply disruptions, as witnessed after Russia’s invasion of Ukraine last year when LNG prices reached an all-time high.
Last year, GAIL had to curtail gas sales to local industries following disruptions in its long-term agreement with the German unit of Russia’s Gazprom, as Berlin diverted volumes to its domestic market.
Qatar, meanwhile, is seeking to sign record volumes of long-term sales contracts this year to expand its market share globally, particularly at Russia’s expense.
The deal with GAIL would be significant as it will make the company the second local firm to enter into an agreement with Qatar.
Petronet LNG, part-owned by GAIL, is already negotiating an extension beyond 2028 for its long-term LNG deal, under which Qatar supplies 8.5 million metric tonnes per year.
One of the sources noted that a deal with GAIL would enhance prospects for renewing Petronet’s deal at improved pricing. India aims to conclude both deals by the end of September.
Indian companies are investing billions in building gas infrastructure and are actively seeking long-term contracts to increase the share of natural gas in the country’s energy mix to 15% by 2030, up from about 6.5% currently.
GAIL’s head of finance, Rakesh Jain, expressed the company’s intention to purchase an additional 7 million to 8 million metric tonnes of LNG by 2030, but aims to avoid depending on a single country for more than 1 million to 2 million metric tonnes annually, mitigating the risk of sudden disruption, reported Reuters.
The company already has two existing contracts to buy 5.8 million metric tonnes per year from the United States and a 2.5 million supply contract with SEFE, the former German Gazprom unit.
Asia is currently leading Europe in securing long-term supply from Qatar’s two-phase expansion plan, which will increase its liquefaction capacity to 126 million metric tonnes per year by 2027, up from 77 million.
So far, Qatar has signed three LNG supply agreements with buyers in China and Bangladesh and is in advanced talks with Thailand’s state energy firm, PTT.