{"id":37914,"date":"2023-10-28T02:26:59","date_gmt":"2023-10-27T20:56:59","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=37914"},"modified":"2025-04-23T02:52:59","modified_gmt":"2025-04-22T21:22:59","slug":"india-qatar-relations","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/india-qatar-relations\/","title":{"rendered":"Centrality of Natural Gas in ties between India and Qatar"},"content":{"rendered":"<h2>What\u2019s in today\u2019s article?<\/h2>\n<ul>\n<li>Why in news?<\/li>\n<li>News Summary: The centrality of natural gas in ties between India and Qatar<\/li>\n<li>Nature of trade relationship between India and Qatar<\/li>\n<li>Gas import dependency of India<\/li>\n<li>Demand for natural gas in India<\/li>\n<li>India, Qatar, and LNG<\/li>\n<li>The global LNG market<\/li>\n<li>Future of LNG Market<\/li>\n<\/ul>\n<h2>Why in news?<\/h2>\n<ul>\n<li>The death sentence given to eight former personnel of the Indian Navy by a court in Qatar presents the biggest challenge yet to India\u2019s historically friendly ties with Doha.<\/li>\n<li>This situation is particularly concerning due to the pivotal role of liquefied natural gas (LNG) in the trade partnership between the two nations.<\/li>\n<li>LNG constitutes nearly half of India&#8217;s total imports (in terms of value) from Qatar, amplifying the complexity of the challenge at hand.<\/li>\n<\/ul>\n<h2>News Summary: The centrality of natural gas in ties between India and Qatar<\/h2>\n<h2>Nature of trade relationship between India and Qatar<\/h2>\n<ul>\n<li>In the case of India and Qatar, the balance of trade is tilted heavily in the latter\u2019s favour.<\/li>\n<li>It is India\u2019s largest source of LNG \u2014 gas that has been super cooled to liquid form so that it can be transported by sea.<\/li>\n<\/ul>\n<h2>Gas import dependency<\/h2>\n<ul>\n<li><u>India\u2019s import dependency in natural gas is around 50%<\/u>, and given the government\u2019s concerted push to increase natural gas consumption, <u>imports are only likely to rise in the coming years.<\/u><\/li>\n<li>Government-owned Petronet LNG, <u>India\u2019s largest LNG importer<\/u>, has a long-term contract with Qatar for the import of 8.5 million tonnes per annum (mtpa) of LNG.<\/li>\n<li>In addition, Qatari gas has a sizable share in India\u2019s LNG purchases from the spot market.<\/li>\n<\/ul>\n<h2>Demand for natural gas in India<\/h2>\n<ul>\n<li>India has set itself an ambitious target to increase the <u>share of natural gas in the primary energy mix to 15% by 2030 from a little more than 6% at present<\/u>.<\/li>\n<li>This is bound to result in a rapid increase in LNG imports over the next few years.<\/li>\n<li>Natural gas is seen as a significantly cleaner alternative to conventional petroleum fuels like diesel and petrol, and is usually cheaper than crude oil.<\/li>\n<li>For India, which has an import dependency of over 85% in crude, <u>gas is both more affordable and a better transition fuel in the energy transition pathway<\/u>.<\/li>\n<\/ul>\n<h2>India, Qatar, and LNG<\/h2>\n<ul>\n<li>India\u2019s import from Qatar\n<ul>\n<li>India\u2019s total imports from Qatar in <u>FY2022-23 were valued at $16.81 billion<\/u>, of which LNG imports alone were worth $8.32 billion.<\/li>\n<li>While Indian LNG importers continue to make efforts to diversify sourcing, it could be years before the high reliance on Qatar can be reduced.<\/li>\n<\/ul>\n<\/li>\n<li>India\u2019s export to Qatar\n<ul>\n<li>India\u2019s exports to Qatar were valued at just $1.97 billion in FY2022-23.<\/li>\n<li>The major exports include cereals, copper articles, iron and steel articles, vegetables, fruits, spices, and processed food products.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2>The global LNG market<\/h2>\n<ul>\n<li>The global LNG market is a seller\u2019s market after Russia\u2019s invasion of Ukraine and the sanctions that have disrupted Russian natural gas supplies to Europe.<\/li>\n<li>After the war broke out, prices, particularly of LNG spot cargoes, surged globally.<\/li>\n<li>Compared with term contracts (such as the one Petronet has with Qatar), the spot LNG market is prone to higher price volatility.\n<ul>\n<li>In a supply glut, <u>spot prices tend to fall more steeply than term contracts<\/u>, as pricing in the latter is based on an agreed formula between the buyer and the seller.<\/li>\n<li>And when supplies are tight, <u>spot prices tend to rise much more than term contract rates.<\/u><\/li>\n<\/ul>\n<\/li>\n<li>The extreme price volatility of the past couple of years in global LNG markets has established that term contracts are the more viable option to secure supplies at a reasonable and stable price.<\/li>\n<li>This has pushed LNG importers all over the world, including India, to scout for long-term contracts with major suppliers, of whom Qatar is the foremost.\n<ul>\n<li>Over the past few weeks, Doha has announced 27-year LNG supply deals with French, Dutch, and Italian energy majors.<\/li>\n<li>In the preceding months, it had signed long-term contracts to supply LNG to China and Germany.<\/li>\n<li>Petronet\u2019s term contract runs out in 2028, and negotiations for an extension are currently under way.\n<ul>\n<li>India is also looking to sign more long-term LNG contracts.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2>Future of LNG Market<\/h2>\n<ul>\n<li>Analysts and industry experts predict that the global LNG market is likely to turn into a buyer\u2019s market over the next few years.\n<ul>\n<li>A buyer&#8217;s market refers to a market condition in which there are more goods or services available than there are buyers for them.<\/li>\n<li>In such a market, <u>buyers have the advantage<\/u> because there is a surplus of supply, giving them greater negotiating power.<\/li>\n<\/ul>\n<\/li>\n<li>This is due to a surge in new LNG export projects coming onstream.<\/li>\n<li>This scenario, however, is still a few years away. And even then, a large chunk of this new LNG export capacity is expected to come onstream in Qatar itself.<\/li>\n<\/ul>\n<hr \/>\n<h3>Q1)\u00a0What is Liquefied natural gas (LNG)?<\/h3>\n<p>Liquefied natural gas (LNG) is natural gas that has been cooled to a liquid state. LNG is made up of mostly methane (CH4) and some ethane (C2H6). It&#8217;s cooled to between -161\u00b0C and -163\u00b0C.\u00a0<\/p>\n<h3>Q2) What is a seller&#8217;s market?<\/h3>\n<p>A seller&#8217;s market is a market where demand for a product exceeds its supply. This imbalance gives the seller the advantage to negotiate better deals from multiple buyers.<\/p>\n<hr \/>\n<p><strong>Source: <\/strong><a href=\"https:\/\/indianexpress.com\/article\/explained\/west-bengal-pds-scam-explained-arrest-tmc-jyotipriya-mallick-9002334\/\" target=\"_blank\" rel=\"nofollow noopener\"><u>The centrality of natural gas in ties between India and Qatar<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Qatar is India\u2019s largest source of liquefied natural gas (LNG).<\/p>\n","protected":false},"author":5,"featured_media":37915,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[],"class_list":{"0":"post-37914","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/37914","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=37914"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/37914\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/37915"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=37914"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=37914"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=37914"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}