QatarEnergy and India are expected to sign soon a new long-term LNG supply deal under which Qatar is set to offer cheaper and more flexible supply to the Asian customer, Reuters reported on Friday, citing trade sources.
Qatar, one of the world’s top LNG exporters, prefers to sign long-term agreements with its buyers and has given its Indian customers until the end of 2023 to negotiate possible extension and/or renewal of the current agreements beyond 2028.
India, for its part, plans to significantly increase its natural gas consumption as it looks to boost its share in the energy mix from 6.3% now to 15% by the end of this decade.
However, the country and its LNG importers are particularly sensitive to surging spot LNG prices and often retreat from the spot market when prices jump. Therefore, India and its large state firms are looking to sign long-term LNG supply deals.
Indian buyers and the Qatari state energy firm have reached an agreement on the terms of the new long-term contracts and a new deal is expected to be signed by the end of January or at the beginning of February, according to one of Reuters’ sources. The new agreement, which would be in force until at least 2050, offers cheaper supply and flexibility in cargo destinations, the source added.
In October, QatarEnergy signed a 27-year agreement to ship LNG to Europe by agreeing to deliver cargoes for Eni in Italy beginning in 2026, after similar deals with Shell and TotalEnergies for supply to the Netherlands and France, respectively.
Eni, Shell, and TotalEnergies are all minority shareholders in the various LNG production trains of the North Field expansion project.
Also in October, Qatar broke ground for the world’s largest LNG project, the North Field expansion project, which will boost the tiny Gulf country’s export capacity by 48 million tons per annum (mmtpa) by 2027.