Petronet holds a long-term LNG import agreement with Qatar, amounting to 7.5 million metric tons per year (tpy), while its associated stakeholders, including Indian Oil Corp, Bharat Petroleum Corp, and GAIL (India) Ltd, are engaged in a separate 1 million tpy deal.
Petronet LNG, India’s leading gas importer, is on the verge of finalizing a deal this month to extend its long-term liquefied natural gas (LNG) imports from Qatar beyond 2028, as announced by India’s Oil Secretary. The current agreement involves a 7.5-million metric ton per year (tpy) long-term LNG import deal with Qatar, and its promoters—Indian Oil Corp, Bharat Petroleum Corp, and GAIL (India) Ltd—have an additional 1 million tpy deal. Negotiations for the renewal of these agreements are nearing completion, with Oil Secretary Pankaj Jain expressing confidence in imminent signing.
Notably, Indian companies had until the close of 2023 to secure the extension of these deals beyond 2028. “We are pretty close to signing the deal,” stated Oil Secretary Pankaj Jain during discussions with reporters.
Qatar, the leading global LNG exporter, has ambitious plans to increase liquefaction capacity from 77 million tpy to 126 million tpy by 2027. The country has already entered into long-term agreements with major European players such as Shell, TotalEnergies, and ENI, along with securing deals with China’s Sinopec, China National Petroleum Corp, and Bangladesh.
In contrast, Petronet LNG’s Head of Finance, V. K. Mishra, clarified on Monday that the company is not seeking additional volumes in the upcoming renewal of its long-term LNG deal with Qatar. The existing 7.5-million tpy deal, in collaboration with Indian Oil Corp, Bharat Petroleum Corp, and GAIL (India) Ltd’s 1 million tpy deal, is set for renewal without any increase in quantity. This position contradicts Petronet’s previous announcement of seeking up to 1 million tons per annum of additional LNG during the renewal.
As the negotiation deadline approaches the end of this year, Qatar continues to solidify its position as a key player in the LNG market, signing recent long-term agreements with Shell, TotalEnergies, and ENI. Despite a diplomatic row between India and Qatar, Petronet LNG’s CEO, A. K. Singh, remains optimistic that the ongoing tensions will not adversely affect their business relations, emphasizing that diplomatic matters will be addressed at the highest levels to ensure a minimal impact on business ties.
PTI News Update – Petronet LNG Negotiates Terms for LNG Renewal
1.Petronet LNG Urges Lower Prices for Long-Term LNG Deal Renewal
2. India’s Growing Energy Demands: Petronet Looks to Secure 0.75-1 Million Tonnes of LNG
3. Price Dynamics: CEO Seeks Qatar Gas Pricing Similar to Recent Contracts with Neighboring Countries
4. Strategic Negotiations: Petronet Eyes Extension of 8.5 Million Tonnes Annual LNG Contract
5.Future Prospects: Exploring Additional LNG Volumes Beyond 2028
6. Rising Gas Demand in India: City Gas Sector Expansion and Government Initiatives
7. Seeking Undelivered Gas Volumes: Petronet’s Request Amid Global Energy Market Volatility
Petronet’s Strategic Negotiations for LNG Renewal and Expansion Amidst Growing Indian Demand
Singh underscored the significance of Qatar’s recent agreements with neighboring countries, including Bangladesh, China, and Pakistan, where pricing slopes have been notably lower than the 12.67% indexation. Petronet is actively negotiating for a more favorable pricing structure, emphasizing a serious commitment to these discussions.
While Petronet’s immediate focus is on securing the extension of the 8.5 million tonnes per year deal, Singh indicated the possibility of seeking additional volumes based on demand assessments. The company’s pursuit of 0.75 to 1 million tonnes of LNG for the upcoming year aligns with the surge in gas demand in India. The government’s push to elevate the share of clean fuel in the energy basket to 15% by 2030 has intensified this demand, particularly with the expansion of the city gas sector involving the supply of CNG to automobiles and piped natural gas to households.
Petronet is also seeking a supply of undelivered gas volumes from past years, stemming from the renegotiation of the pricing formula in 2015. Although India had not taken delivery of some 46 cargoes during the renegotiation, Qatar had agreed to revise the pricing formula, contingent on India purchasing an additional 1 million tonnes per annum of LNG. While Petronet made the request for the supply of undelivered cargoes last year, Qatar’s response is pending.
Singh acknowledged the impact of Western sanctions against Russia on global energy markets, emphasizing the potential for Qatar to offer a viable alternative as Europe seeks to reduce reliance on Russian gas. He noted that current spot LNG prices of about 18-19 per mmBtu are reasonable, and demand is expected to rebound if prices remain in that range.
