India is likely to sign a USD 78 billion deal to extend LNG imports from Qatar by another 20 years till 2048 at rates lower than current prices, sources said. Petronet LNG Ltd, India’s biggest liquefied natural gas (LNG) importer, is likely to sign a deal with QatarEnergy to extend a 2004 deal to buy 7.5 million tonne a year of gas for producing electricity, making fertilizers and converting to CNG, on the sidelines of India Energy Week (IEW) here.

Sources said the renewal is at a “significantly” lower price than the current deal. At current prices, India will save about USD 0.8 per million British thermal unit at the renewed terms.

Petronet imports 8.5 million tonne per year (MTPA) of LNG from Qatar under two contracts. The first 25-year deal is to expire in 2028 and is now being extended for 20 additional years. The second deal for 1 MTPA entered into in 2015, will be negotiated separately, sources said.

Qatar’s energy minister and top officials of QatarEnergy are attending the IEW here.

India, the world’s third biggest energy consumer, sees natural gas as a transition fuel for migrating to net zero carbon emissions by 2070. As part of this, the government is targeting to raise the share of natural gas in the country’s energy mix to 15 per cent by 2030 from 6.3 per cent now.

Sources said the current deal is priced at 12.67 per cent of prevailing Brent crude oil prices plus a fixed component of USD 0.52 per million British thermal unit.

Under the new contract, the slope would remain more or less the same but the fixed charge of USD 0.52 would be scrapped, they said.

Also, India will save an additional USD 0.30 per mmBtu on shipping charges as Qatar has agreed to convert the deal to Delivered Ex Ship (DES) from Free on Board (FOB), thereby undertaking responsibility of shipping.

At USD 80 per barrel Brent crude oil price, the annual 7.5 MTPA import will cost USD 3.9 billion annually and over a 20-year period it would total to over USD 78 billion.

While 7.5 MTPA of LNG is bought by Petronet, the firm’s promoters state-owned Indian Oil Corp (IOC), Bharat Petroleum and GAIL (India) buy a combined 1 MTPA of LNG.

Sources said the new deal will allow the Indian buyers to decide which terminal in India will receive cargoes. Under existing deals, Qatar delivers LNG at Dahej in Gujarat.

Sources said the freedom to decide on the arrival terminal will result in additional savings in cost for transporting the fuel through pipelines within the Indian grid.