India’s top gas importer Petronet is seeking to extend its current deal with Qatar Gas to beyond 2028.
Indian gas importer Petronet has set its eyes on higher volumes of liquified natural gas (LNG) at better prices from QatarGas as the importer negotiates for an extension of its long-term LNG deal beyond the year 2028.
Petronet and QatarGas are currently under a deal for 7.5 million tonnes per year (mtpy) of LNG by the end of 2023. However, the companies will need to negotiate an extension of the current deal.
“We are trying to extend the contract beyond 2028, we are making all efforts to renegotiate and perhaps expand that contract,” said head of finance at Petronet Vinod Kumar Mishra.
Mishra said any extension of the India-Qatar deal would be based on QatarGas’s deals with China, Bangladesh and Pakistan, where gas prices are “based on a slope of approximately 10.2% of the Brent crude price on a delivered ex-ship basis,” according to a Reuters report.
In comparison, New Delhi’s LNG deal with Doha is linked to a slope of about 12.7% of the three-month average Brent price.
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India plans on raising the share of cleaner fuel in its energy mix to 15% by 2030, 11% up from its current shares. Gas demand in the country is set to increase.
According to Mishra, buying gas under long term deals is the best way to go in India’s current scenario.
Gas under longterm deals means a price tag of $10.2 per million British thermal units (mmBTu) for Petronet, compared to spot prices of about $30 per mmBTU.
“If you need gas on a regular basis, permanent basis you cannot rely on spot or short term cargoes….definitely we will be making efforts to enhance the contract from 7.5 mtpa,” said Mishra.
Meanwhile, Petronet is set to build a third LNG import terminal on the east coast of the country to further expand its capacity.
Indian energy crisis
Last month, India called on Doha to expedite a delivery of LNG cargo it said was delayed.
At the time, Qatargas had yet to transport 50 LNG cargoes to India after an infrastructure maintenance project at the Qatari supplier facility caused a delay in delivery this year.
India is struggling with its worst power crisis in five years due to coal shortage amid growing demand for energy and a global energy crisis.
India’s petroleum ministry also requested eight other cargoes that were halted last year at New Delhi’s request as Covid-19 induced lockdowns decreased demand for the super-cooled fuel.
Later, top LNG exporter QatarEnergy, formerly Qatar Petroleum, expressed its commitment to being a ‘trusted partner’ in supplying energy to India, saying it does not miss shipments it has obligations to deliver.