Personal
agendas might be reigning supreme in case of Qatar that has agreed to reduce
the price of LNG supply Pakistan and could not adhere to an Indian request for
the same. When India recently requested
Qatar to reduce the prices of LNG that it has been exporting to India over two
long term contracts, Doha said it could not do so because it was keener to respect
the sanctity of the contracts between the two countries.
India
had signed two long term contracts with Qatar 1999 for supply to start in 2004.
Qatar meets more than 60 percent of India’s LNG needs and the rest being
divided amongst its other partner like Germany, US, Australia and Russia.
Prices
were renegotiated only in 2015, leading to about a 50% cut in prices for India,
which agreed to buy an extra 1 million tonnes per annum (mtpa) of the
super-cooled gas from Qatar. Now, Doha does not want to lower its prices and
said it was happy to supply more to meet India’s increasing gas needs.
On
the flip side, Pakistan has been able to get Qatar to reduce its price on the
pretext that under their agreement, Doha would have to match a price at par
with 13 percent price of crude oil internationally. Price of crude oil has been
on the downward movement due to the increasing threat of the coronavirus that
started building in December last year from China. The price dropped from 49
dollars to 35 dollars per barrel across the world due to mutual oil price
competition between Saudi Arabia and Russia at that time in January.
India
feels compelled to ask Qatar to lower its selling price due to the spot LNG
prices for the fuel delivered at Indian ports that are currently around half
the price compared to that in the long-term supply contracts.
No
wonder, Qatar’s LNG prices under long-term supply contracts might look much
less appealing to India, which has set a goal to more than double the share of
natural gas in its energy mix by 2030.
The
price selling gas to India has been constant despite the dips in the oil
prices, putting pressure on the Indian consumer. India meets most of its LNG
needs through Qatar that is its largest supplying partner. Qatar holds one of
the world’s largest reserves of natural gas and has been working to create
infrastructure that could facilitate comfortable exports to others parts of the
world.
Qatar has been a smart seller after it was
expelled from the quartet. It has been carefully looking at building its bonds
with prospective buyers for its natural gas reserves which makes it an
extremely lucrative seller to countries that are looking for energy efficient
fuel.
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