India gets ready for long-term Qatar LNG deal after securing one with UAE
Business
New Delhi is working on ensuring energy security as the country eyes a high growth rate
NEW DELHI/LONDON/SINGAPORE (Reuters/Web Desk) - GAIL (India) Ltd is close to finalising a long-term liquefied natural gas (LNG) import deal with Qatar to buy at least 1 million metric tons per year, potentially for more than 20 years, three industry and trade sources said.
The negotiations come as Abu Dhabi's ADNOC last month announced a 14-year $7 billion to $9 billion deal with Indian Oil Corp to supply 1.2 million metric tons of LNG per year – a deal signed during Prime Minister Narendra Modi's visit to the United Arab Emirates (UAE).
India is working on ensuring energy security as the country eyes a high growth rate with the ambitions becoming a developed economy in the coming decades.
The deal would be part of GAIL's plans to lock in new supply contracts by 2030 to diversify its gas imports and hedge against supply disruptions like those seen after Russia's invasion of Ukraine last year, when LNG prices surged to a record high.
Neither state-controlled GAIL nor QatarEnergy responded to Reuters requests for comments.
GAIL had to cut gas sales to some local industries last year after supplies under its long-term deal with the German unit of Russia's Gazprom were hit when it was taken over by Berlin, which diverted volumes to its own market.
Qatar, the world's top LNG exporter, is looking to sign record volumes of long-term sales contracts this year as it expands market share globally at the expense of Russia.
GAIL, India's largest pipeline operator, would be the second local company to sign a deal with Qatar. Petronet LNG, part owned by GAIL, is also negotiating an extension to beyond 2028 of its long-term LNG deal, under which Qatar supplies 8.5 million metric tons per year of LNG.
A deal with GAIL would strengthen prospects for the renewal of Petronet's deal at better pricing, said one of the sources, adding India's target is to sign the two deals by September-end.
GAIL is looking to buy 1 million to 1.5 million metric tons per year of LNG from QatarEnergy, the sources said.
Indian companies are investing billions of dollars to build gas infrastructure and scouting for long-term deals to raise the share of natural gas in the country's energy mix to 15pc by 2030 from about 6.5pc now.
GAIL plans to buy an additional 7 million to 8 million metric tons per year of LNG by 2030 but does not intend to depend on one country for more than 1 million to 2 million metric tons per year of that to avoid the risk of sudden disruption, its head of finance Rakesh Jain said on Monday.
The company has two existing contracts to buy a combined 5.8 million metric tons per year of LNG from the United States and a 2.5 million supply contract with SEFE, the former German Gazprom unit.
Asia has outpaced Europe in locking in long-term supply from Qatar's two-phase expansion plan that will raise its liquefaction capacity to 126 million metric ton per year by 2027 from 77 million.
Qatar has so far signed three LNG supply deals with buyers in China and Bangladesh and is also in advanced talks with Thailand's state energy firm PTT.
