The centrality of natural gas in ties between India and Qatar
- October 28, 2023
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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The centrality of natural gas in ties between India and Qatar
Subject :IR
Section: Places in news
Context: The death sentence given to eight former personnel of the Indian Navy by a court in Qatar presents the biggest challenge for India.
India’s Gas import dependency:
- India currently imports approximately 50% of its natural gas due to the government’s efforts to increase natural gas consumption. Even if domestic natural gas production increases, these imports are expected to rise further in the future.
- The government-owned Petronet LNG, India’s largest LNG importer, has a long-term contract with Qatar to import 8.5 million tonnes per annum (mtpa) of LNG.
- Qatar also plays a significant role in India’s LNG purchases from the spot market.
- India has set an ambitious target to raise the share of natural gas in its primary energy mix from slightly over 6% to 15% by 2030, which will likely lead to a rapid increase in LNG imports in the coming years.
- Natural gas is considered a cleaner and more cost-effective alternative to conventional petroleum fuels like diesel and petrol.
- India’s heavy reliance on crude oil imports to over 85% makes natural gas a crucial transition fuel in India’s energy strategy.
- The situation with India’s energy security concerns and aspirations, coupled with its increasing natural gas demand, presents a sensitive challenge for Indian diplomacy, possibly highlighting the need for secure and stable natural gas sources like Qatar
The global LNG market:
- The global liquefied natural gas (LNG) market has become a seller’s market due to Russia’s invasion of Ukraine and the resulting sanctions disrupting Russian natural gas supplies to Europe. This disruption has caused prices, especially for LNG spot cargoes, to increase worldwide.
- Spot LNG prices tend to be more volatile compared to long-term contracts. In a supply surplus, spot prices drop more sharply, whereas in times of supply shortages, spot prices rise more significantly.
- Qatar, the world’s largest LNG exporter, has gained significant leverage in this situation.
- Industry experts suggest that long-term contracts provide a more stable and reasonable way to secure LNG supplies, especially considering the recent price volatility in global LNG markets.
- This has prompted LNG importers, including India, to seek long-term contracts with major suppliers, with Qatar being a primary choice.
- Qatar has recently signed long-term LNG supply deals with various countries.
- Petronet’s existing long-term LNG contract with Qatar is set to expire in 2028, and negotiations for an extension are ongoing. India is also exploring additional long-term LNG contracts.
- Analysts and experts anticipate that the global LNG market may transition into a buyer’s market in the coming years due to the development of new LNG export projects. However, this shift is expected to take some time, and a significant portion of new export capacity is likely to come from Qatar itself.
Some facts about India -Qatar relations
- Indians are the largest expatriate community in Qatar.
- 2023 marks 50 years of establishment of full diplomatic relations between India and Qatar.
- India was among the few countries which recognized Qatar soon after its independence in 1971.
- Exercise Zair-Al-Bahr is a bilateral maritime exercise between the two navies.
Some facts about Qatar:
- Qatar is a peninsula in the Middle East, bordering Saudi Arabia to the south and the Persian Gulf to the east and north.
- The Gulf of Bahrain, an inlet of the Persian Gulf, separates Qatar from nearby Bahrain
- Capital: Doha
- Official language: Arabic
- Currency: Qatari Riyal (QAR)
- It is the world’s largest exporter of liquefied natural gas
- It hosted the FIFA World Cup in 2022.