In a major step to ensure India's long-term energy security, Petronet LNG Limited (PLL) has executed a 20-year purchase deal of around 7.5 metric million tonnes per annum (MMTPA) of Liquified Natural Gas (LNG) with Qatar Energy. The deal is of national significance as Qatar Energy currently supplies around 35% of India’s LNG imports.

India was negotiating for a long-term deal with Qatar Energy as the existing deal signed on 31st July 1999 to supply 7.5 MMTPA, is set to expire in 2028. Under the new agreement, LNG supplies will be made on delivered (DES) basis commencing from 2028 till 2048. ''Renewal of this agreement is a step towards making India a gas-based economy and increase the share of natural gas in India’s primary energy basket to 15% by the year 2030'', Akshay Kumar Singh, MD & CEO, Petronet LNG Limited said after signing the agreement with Qatar Energy at India Energy week expo in Goa.

Natural gas currently constitutes only about 6.3% of India's energy basket and the Government plans to increase this to 15% by 2030. Sources say the new deal worth about $78 billion could save about $6 billion during the supply period when compared with the existing contract norms. The demand for natural gas in the country is likely to double to 115 billion cubic meters (bcm) in 2030 from 66 bcm in 2021, says a recent International Energy Agency's World Energy Outlook.

Petronet says similar to the earlier agreement of 1999, the LNG volumes under the new SPA shall also be taken by GAIL (India) Limited (60%), Indian Oil Corporation Limited (30%) and Bharat Petroleum Corporation Limited (10%) after regasification primarily from Dahej Terminal of PLL on substantially back to back basis. Regasified LNG will be supplied to major consuming sectors like fertilisers, CGD, refineries & petchem, power and other industries. Petronet LNG Limited is a Joint Venture public sector company with equity participation from four Oil & Gas Maharatna Public Sector undertakings - GAIL, ONGC, IOCL and BPCL each holding equity of 12.50%. Petronet, which accounts for around 33% of total Natural gas supplies in the country, has a 47% share of the country’s existing LNG Regas Capacity and handles around 75% of the country’s LNG imports.

Petronet had set up the country’s first LNG Receiving and Regasification Terminal and started its operations in the year 2004, with an initial nameplate capacity of 5 MMTPA at Dahej, Gujarat. Since then, the capacity of Dahej terminal has been expanded in phases (10 MMTPA in year 2009, 15 MMTPA in 2016 and 17.5 MMTPA in 2019). Now the capacity is being increased to 22.5 MMTPA.  To cater to the gas requirement of Southern India, Petronet commissioned its second terminal in Kochi in 2013 with a capacity of 5 MMTPA. It is also setting up a Floating Storage Regasification Unit (FSRU) based LNG terminal with an initial capacity of 4 MMTPA, with a future provision of converting it to land-based terminal of 5 MMTPA capacity on the East Coast of India at Gopalpur, Odisha, besides a Petrochemicals project, including propane and ethane handling facility at Dahej, Gujarat.

Follow us on Facebook, Twitter, YouTube & Instagram to never miss an update from Fortune India. To buy a copy, visit Amazon.