Why has Qatar refused to renegotiate prices of LNG contracts with India?

Qatar is not willing to renegotiate prices under its long-term liquefied natural gas (LNG) contracts with India. Why is this so? Will PM Modi use alternative channels to renegotiate the prices?

Qatar

In a latest development, Qatar is not willing to renegotiate prices under its long-term liquefied natural gas (LNG) contracts with India, the Middle Eastern nation’s energy minister said on Monday. Sources in Islamabad told GVS that India used all channels to convince the state of Qatar but remained unable to do so.

Qatar is, however, willing to supply more volumes of LNG to India, said Saad Sherida al-Kaabi, who is in India to meet his counterpart, at an event in New Delhi.

India, which imports 8.5 million tonnes of LNG annually under long-term supply deals with Qatar, was looking to renegotiate the long-term contract price of LNG it buys from Qatar, Indian oil minister Dharmendra Pradhan said earlier on Monday.

Kaabi, who is also the chief executive of Qatar Petroleum, was accompanied by the chief executive of Qatar Gas, Sheikh Khalid bin Khalifa Al Thani. “We don’t renegotiate existing contracts. Contracts are contracts for the duration we sign them for. We as businesses understand that the sanctity of contract is important for both sides. And for the credibility of both sides, both parties must respect that,” he said. “We are looking forward to adding more volumes in India and negotiating additional volumes.”

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Delivered spot prices to Indian ports are about half of those under the long-term LNG deals, reducing the appeal of the Qatar supply contracts for price sensitive Indian consumers.

Prime Minister Narendra Modi has said India needs to increase the share of natural gas in its energy mix to 15% by 2030 from 6.5% now.

India has in the past used its status as Asia’s third-largest LNG buyer to renegotiate deals with Qatar, Australia, and Russia. In 2015, it renegotiated the price of the long-term deal to import 7.5 million tonnes per year of LNG from Qatar, helping it save Rs 8,000 crore. At that time, Qatar agreed to price LNG at a three-month average Brent oil price instead of the previous practice of pricing it at a 60-month average of Japanese Crude Cocktail (JCC) in exchange for India buying an additional 1 million tonnes per annum of LNG. Both the contracts end in 2028.

Qatar Airways signs a one-way code-share with IndiGo

It is important to note that recently Qatar Airways (QA) and IndiGo have signed a one-way codeshare agreement. In a regulatory filing, InterGlobe Aviation – the parent company of budget airline operator IndiGo – said the agreement is in-line with its international expansion plans and will enable Qatar Airways to place its code on IndiGo flights between Doha and Delhi, Mumbai and Hyderabad.

Qatar Airways currently operates 102 weekly flights between Doha and 13 destinations in India, including Delhi, Mumbai, Bengaluru, and Goa

IndiGo said this marks its second codeshare agreement as part of its growth strategy for international markets. Shares in InterGlobe Aviation rose nearly 2 percent after the announcement.

According to details, QA will place its code “QR” on IndiGo operated flights between Doha and the three Indian cities, IndiGo said. “This strategic alliance will not only strengthen our international operations but also boost economic growth in India, by bringing in more traffic and heralding opportunities for trade and tourism through seamless mobility,” said Ronojoy Dutta, chief executive officer, IndiGo.

Read more: How is Qatar countering the spread of Fake News?

Qatar Airways CEO Akbar Al Baker added that he is also interested in buying a stake in IndiGo but this is not the right time as issues among promoters are yet to be resolved. Qatar had in the past also shown interest in investing in IndiGo but the budget carrier has resisted.

Qatar Airways currently operates 102 weekly flights between Doha and 13 destinations in India, including Delhi, Mumbai, Bengaluru, and Goa.

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