(MENAFN- The Peninsula) By Satish Kanady / The Peninsula
As Qatar begins ramping up its natural gas production, the energy-hungry India expects Qatar's enhanced supply capabilities will help boost the country's LNG import volume very soon.
'Qatar is increasing its LNG output in the next three to four years in huge volume. Obviously, there is much bigger scope for additional supply. Currently, India receives 8.5 million tones of gas per annum from Qatar. We have plans to double the amount of gas used to import to India. Therefore, India is looking at Qatar's enhanced supply capabilities with huge interests, P Kumaran (pictured), India's Ambassador to Qatar told The Peninsula yesterday.
In July, Qatar Petroleum announced that it had to increase natural gas production by 30 percent over the next several years. Saad Sherida Al Kaabi, the company's CEO, said QP intends to raise production from 77 million tonnes of natural gas to 100 million tonnes a year by 2024.
Speaking on the sidelines of an Indian trade and investment delegation meeting in Qatar Chamber (QC), the Indian envoy said : 'Currently, the Qatar-India trade is in the range of $10-$10.5bn, of which $9-$9.5bn is the value of Qatar's export to India, mostly LNG and petrochemicals.
As Qatar ramps up its gas production, India is looking to enhance its import volume in a big way, he added.
India's Petronet has already signed an agreement to purchase 7.5 million tonnes of LNG every year from Qatar for a period of 25 years, the first shipment took place in 2004.
The full supplies of 7.5 million ton began from January 2010. In addition, spot cargoes are purchased from time to time. 'Petronet signed (May 2014) a deal to buy 0.8 million tonness LNG from Qatar's RasGas in the fiscal year that began on April 1, 2014.
The gas is being imported at Petronet's 10-million-tonne-a-year Dahej regassification terminal in western India. In Dec 2014, Petronet received its 1000th cargo at Dahej from RasGas.
On December 31, 2015, Petronet signed a fresh agreement with RasGas to purchase an additional 1.0 million tons of LNG annually through the remainder of the existing 25-year contract, ending in 2028, publicly available document from Indian embassy shows.
India is the third largest export destination for Qatar, behind Japan and South Korea, while import from India to Qatar stand at 10th on the list. India is a major buyer of ethylene, propylene, ammonia, urea and polyethylene from Qatar.
However, India has been a major customer for Qatari crude oil/products. A letter of Intent has been signed with Qatar on setting up a Joint Venture fertilizer plant in Qatar, subject to allocation of gas for this project.
According to energy intelligence portal The Platt, India's LNG imports should rise by 10 percent annually over the next few years, surpassing 30 million mt/year by 2020, versus 19 million mt/year in 2016. Growth is driven by fast-rising energy demand. The government is increasingly focusing on environmental issues and existing infrastructure bottlenecks.
To meet this growing gas supply-demand gap, Indian LNG demand should outpace the volumes supplied under current long-term LNG contracts signed by Petronet, Gail, and GSPC.
By 2020, currently contracted volumes will stand at nearly 22 million mt, but with demand rising to over 30 million mt, around 8.5 million tons of demand would have to be met by spot market purchases in 2021, according to market watchers.
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