State-owned LNG giant QatarEnergy has signed a long-term contract with India’s largest LNG importer Petronet LNG.
Under the 20-year sales and purchase agreement, Petronet will buy around 7.5 mtpa of LNG from QatarEnergy.
Petronet said in a statement on Tuesday that this deal is pursuant to extension of an existing LNG SPA for supply of around 7.5 mtpa of LNG on FOB basis, signed in July 1999 for supplies until 2028.
This deal was followed in 2015 by another agreement for the supply of an additional 1 mtpa of LNG, raising the total annual long-term volumes contracted between the two sides to 8.5 mtpa.
Under the new agreement, LNG supplies will be made on delivered (DES) basis starting from 2028 until 2048.
Similar to the earlier agreement, India’s largest gas utility GAIL will offtake 60 percent of the volumes under the new SPA, while Indian Oil will offtake 30 percent, and Bharat Petroleum will offtake 10 percent of the volumes after regasification primarily from Petronet’s Dahej terminal on substantially back to back basis, it said.
GAIL, ONGC, IOCL, and BPCL each hold 12.5 percent of equity in Petronet.
35 percent of India’s LNG imports
Petronet said the SPA will ensure energy security of India and assure continued supplies of regasified LNG to major consuming sectors like fertilizers, CGD, refineries and petchem, power, and other industries.
Akshay Kumar Singh, Petronet’s MD and CEO, said the existing long-term agreement between the two firms today accounts for around 35 percent of India’s LNG imports.
He said renewal of this agreement will help India become a gas-based economy and increase share of natural gas in India’s primary energy basket to 15 percent by year 2030.
Petronet did not provide the pricing details of the contract.
Several reports suggest that Petronet secured a better price compared to the previous contract.
The new deal could be priced at a slope of 12 percent of the current Brent crude oil futures prices, the reports said.
QatarEnergy said in a separate statement later on Tuesday that the contracted LNG volumes from Qatar will be delivered ex-ship to terminals across India onboard QatarEnergy’s vast LNG fleet starting May 2028.
The LNG giant is significantly increasing its LNG production from the North Field.
The first phase of the North Field expansion project will increase Qatar’s LNG production capacity from 77 to 110 Mtpa, while the second phase will further boost capacity to 126 Mtpa.
QatarEnergy recently signed a 15-year deal with US FSRU player Excelerate Energy to supply Bangladesh with LNG.
This Excelerate deal is the first LNG SPA the firm announced this year after signing huge contracts in 2023.