Petronet in talks with Qatar for LNG deal renewal amid turbulent markets

By Nidhi Verma

NEW DELHI (Reuters) - India's Petronet LNG has begun talks with Qatar to renew a multi-year gas deal despite market "turbulence", making new long-term contracts difficult as sanctions on Russian fuel have squeezed an already tightly supplied market.

India's top gas importer has till end-2023 to renew its long-term liquefied natural gas (LNG) deal with Qatar Gas to beyond 2028, its head of finance Vinod Kumar Mishra told an analyst call after the Petronet announced quarterly earnings.

He said it was not a "perfect environment" to initiate new long-term deals as market was tight and European companies were aggressively scouting for contracts to cut dependence on Russia after Moscow's invasion of Ukraine.

Qatar is already in talks with Germany for long-term gas supplies, helping Europe's biggest economy cut dependence on Russian energy sources.

Petronet, however, hopes Qatar would lower gas prices for India, mirroring contracts signed with Bangladesh, Pakistan and China, where prices are linked to a slope of 10.2% of the Brent crude.

In contrast, India's existing LNG deal with Qatar is based on a slope of about 12.67% of the Brent price.

"We have already started negotiations but the environment is not like that people may agree to it because of lot of turbulence in the market," he said, adding his company would buy more volumes if Qatar offered favourable pricing terms.

Due to high spot LNG prices some Indian customers have switched to alternative fuels, he said.

India's gas demand is set to surge as Prime Minister Narendra Modi aims to raise the share of natural gas in the country's energy mix to 15% from 6.7%.

Mishra said recent government decision mandating GAIL (India) Ltd to import gas for meeting rising demand from transport and households sector would help increase utilisation of capacity at its terminals and raise the company's revenue.

Earlier in the day, Petronet's chief executive A.K. Singh also said Petronet is looking for 0.75-1 million tonne of LNG in immediate term to meet the rising demand.

(Reporting by Nidhi Verma; editing by David Evans)