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India’s Petronet suspends LNG supply talks with Qatar
POLICY
INDIA has temporarily halted talks to secure a 1mn tonne per year (tpy) LNG deal with Qatar.
According to sources familiar with the situa- tion, the main reason behind the delay by India’s state-owned Petronet LNG is the current price of LNG.
In a conversation with local analysts, Petr- onet’s head of finance, Vinod Kumar Mishra, said: “If you go for any long-term contract it comes at a very high slope, so we are waiting for some time because if prices come down [on the international market] then we can get a good price ... we are waiting for [the] right environment.”
No date has yet been suggested for a resump- tion in the talks. Plans for a 1mn tpy add-on to India’s current 7.5mn tpy agreement with Qatar remain in the air.
India’s current LNG supply deal with Qatar runs until the end of 2028.
The suspension of talks comes as Qatar is also seeking to consolidate its current position as the world’s biggest exporter of LNG.
The Middle Eastern energy giant exported $11.9bn worth of LNG in April, enabling it to move past the US on the international ranking charts the same month.
But with India ranking second on the list of countries receiving Qatari exports of LNG, after China but ahead of Japan, Qatar will likely be keen to appease all important buyers on the sub-continent.
Petronet, meanwhile, is still aiming to agree to an expansion of the 7.5mn tpy deal by the end of next year. Addressing this, Mishra
hinted that India may soon be in the market for additional volumes of LNG from either Qatar or elsewhere.
It is understood that negotiations for the additional 1mn tpy were aimed at fulfilling demand across India from small-scale users across a range of industries.
With prices still presumably deemed too high to attract buyers, Mishra went on to indicate that India may even be prepared to wait until an eas- ing of tensions in the Russia-Ukraine war helps push prices lower.
Complicating matters for Asia-Pacific coun- tries, according to some Indian analysts, was the announcement this week that exports of LNG from Australia could see a significant drop-off in the next few months. There are concerns that the Australian government could seek to guaran- tee domestic supply before allowing for cargoes to be exported.
Increased competition too from Southeast Asia is another issue India may have to deal with as the Philippines joins the ranks of LNG-im- porting countries.
For now, the managing director of Petronet, A.K. Singh has echoed his colleague’s wariness of rising prices, saying this is the prime reason for a downturn in LNG demand across India.
Singh added that he did not see this as a fac- tor in Petronet’s negotiations to renew its deal with Qatar though, given expanding output in the Middle East. He did add, however, that post- war Russian LNG being released onto the market when hostilities with Ukraine end could affect current deals and regional supply routes.
the main reason behind the delay by India’s state- owned Petronet LNG is the current price of LNG.
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