The Hindu Business Line : Back to Qatar for LNG

The wheel has turned full circle in the country's quest for natural gas. It all began with Qatar in the late-1990s, when the country's first LNG deal for supply of 7.5 million tonnes for 25 years was signed with RasGas, a joint venture of Qatar Petroleum and ExxonMobil. And now, it is back to Qatar again after brief dalliances with Iran and Oman. The offer of an equity stake of up to 12.5 per cent to Qatar in Petronet LNG in return for long-term supply of 10 million tonnes of LNG is born out of the recognition that Qatar could be a reliable energy partner for the country. At present RasGas supplies LNG to Petronet at the contracted price of $2.5 per million British thermal unit, less than half the prevailing market price. Unlike Iran, which demanded a re-negotiation of the price on the ill-fated LNG supply deal even before the ink had dried on the contract, Qatar did not attempt to re-negotiate its contract.

The equity offer presents a chance for Qatar to participate in the growth of one of the fastest growing gas markets in the world. While Qatar will be able to protect its interests in the Indian market, for Petronet LNG, the equity offer will ensure reliable access to LNG at favourable terms. All this is assuming, of course, that businessmen on both sides see the commercial sense in what the politicians of the two countries have discussed.

RAGHUVIR SRINIVASAN

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