QatarEnergy has struck a 20-year LNG Sale and Purchase Agreement (SPA) with Petronet LNG for the supply of 7.5 million tons per annum (MTPA) of LNG to India from May 2028.
The long-term contract underlines the primacy of energy security amid heightened geopolitical tensions, and further evidence of LNG’s long-term appeal, despite mounting sustainability scrutiny following the US LNG export approval pause (click here).
The length of the agreement allowed India to negotiate better prices, according to sources.
In neat symmetry, the 20-year deal follows the recent 20th anniversary of the inaugural LNG shipment from Qatar to Petronet’s LNG Dahej Terminal, as both countries look to cement relations for another two decades. Currently Qatar accounts for around 35% of India’s LNG imports.
The signing of the SPA in Goa coincided with India Energy Week.
Petronet first entered into an agreement for the supply of LNG from Qatar in 1999 for the delivery of 7.5 MTPA. It 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.
Similar to an earlier agreement of 1999, the LNG volumes under the new SPA shall also be off-taken by GAIL (India) (60%), Indian Oil Corporation (30%) and Bharat Petroleum Corporation (10%) after regasification, primarily from Dahej Terminal of Petronet on substantially back-to-back basis, according to Indian media reports.
The deal is important for Qatar too, as its LNG production capacity is set to rise to 126 Mtpa by 2027, and such a tie-up provides another window of opportunity during the US uncertainty.
During India Energy Week, His Excellency Saad Sherida Al-Kaabi, the Minister of State for Energy Affairs, and President and CEO of QatarEnergy, highlighted the challenges in navigating the “volatilities, uncertainties and complexities” impacting the energy industry.
According to S&P Global Commodity Insights, the deal represents one of the largest signed by Qatar with a single state-owned Asian gas importer, and markets are keenly eyeing the terms as they would set an industry benchmark for oil-linked long-term contracts and negotiations for the rest of this year.
“For India, an extension of LNG supply contracts with Qatar will highlight its long-term LNG procurement strategy as the industry has changed significantly since the initial deals were signed, new suppliers like the US and Australia have gained significant market share and India’s own economic profile and outlook has evolved,” it notes.
Qatar Energy has three existing contracts with Petronet LNG expiring in 2028; a 5 million Mt/year deal over 24 years, a 2.5 million Mt/year deal over around 18.5 years and a 1 million Mt/year deal for over 12 years, according to S&P Global Commodity Insights data.
The market has seen a flurry of long-term contracts. GAIL signed an LNG supply deal with Vitol last month, for 1 million Mt/year starting in 2026 for 10 years (click here), and another decade-long deal with ADNOC (click here).