Why in news?

India-Qatar trade is primarily driven by India's liquefied natural gas (LNG) imports, with Qatar being its largest supplier. As both nations seek to double bilateral trade in the next five years, LNG is expected to remain a key factor in achieving this goal.

During the recent visit of Qatar’s Amir Sheikh Tamim bin Hamad Al-Thani, India and Qatar set a goal to double bilateral trade to $28 billion annually by 2030 and upgraded their ties to a strategic partnership.

What’s in today’s article?

• LNG: The Energy Driving India-Qatar Trade
• Growth in India’s LNG Imports and Qatar’s Expanding Export Capacity
• The US Factor in India’s LNG Market
• Conclusion: Energy as a Core Pillar

LNG: The Energy Driving India-Qatar Trade

• India’s LNG imports are set to rise over the next five years due to increasing natural gas consumption.
• This aligns with Qatar’s plans to expand its LNG export capacity, making it a key supplier alongside the US.
• Indian oil and gas companies are exploring both markets to meet growing demand.
• Trade Imbalance in Qatar’s Favor
  • Despite India’s efforts to boost exports and attract Qatari investments, the trade balance remains heavily tilted towards Qatar.
  • LNG is the largest component of India’s imports from Qatar, contributing 50% of total imports, which stood at $11.49 billion in the first 11 months of 2024.
  • Other major imports include LPG, crude oil, plastics, and petrochemicals, while India’s exports to Qatar were only $1.61 billion during the same period.
• Qatar’s Dominance in India’s LNG Imports
  • From January to November 2024, India imported 9.82 million tonnes of LNG from Qatar, making up 38.8% of India’s total LNG imports by volume.
  • In value terms, Qatar accounted for 41.2% of India’s LNG imports, worth $5.75 billion.
• Long-Term LNG Contracts and Future Supply
  • India’s largest LNG importer, Petronet LNG, has a long-term contract with Qatar for 7.5 million tonnes per annum (mtpa) of LNG, recently extended until 2048.
  • In addition to these contracted volumes, Qatar also plays a significant role in India’s spot LNG market.
  • In December 2024, GAIL signed a five-year agreement with QatarEnergy for additional LNG supplies, further strengthening the energy partnership between the two nations.

Growth in India’s LNG Imports and Qatar’s Expanding Export Capacity

• India aims to increase natural gas’s share in its primary energy mix from just over 6% to 15% by 2030.
• According to the International Energy Agency (IEA), India’s natural gas consumption is expected to grow nearly 60% from 2023 levels, reaching 103 billion cubic metres (bcm) by 2030.
• With domestic production meeting only half of the country’s demand, LNG imports are set to rise significantly in the coming years.
• India’s Expanding Role in Global LNG Markets
  • Between 2013 and 2023, India’s LNG imports grew by 70%, reaching 36 bcm in 2024, reinforcing its position as the world’s fourth-largest LNG importer.
  • The IEA projects India’s LNG demand to grow at an annual rate of 11% until 2030, prompting Indian oil and gas companies to secure long-term supply contracts.
  • Recently, Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), and Gujarat State Petroleum Corporation (GSPC) signed major LNG import agreements with global energy firms.
• Qatar’s Expanding LNG Export Capacity
  • As India’s LNG imports surge, Qatar is set to almost double its liquefaction capacity from 77 mtpa to 142 mtpa by 2027.
  • This expansion could further solidify Qatar’s position as India’s leading LNG supplier, ensuring long-term energy security for both nations.

The US Factor in India’s LNG Market

• The United States, the world’s largest LNG exporter, is emerging as Qatar’s biggest competitor in India’s LNG market.
• In January-November 2024, India imported 5.12 million tonnes of LNG from the US, accounting for 20.2% of total LNG imports, valued at nearly $2.5 billion.
• US-India Energy Partnership
  • New Delhi and Washington have agreed to enhance US energy exports to India, aiming to position the US as a leading supplier of oil and gas.
  • This initiative could also help reduce the trade deficit between the two nations.
• US LNG Export Policy and India’s Interest
  • With US President Donald Trump lifting the Biden-era ban on new LNG export permits, Washington is expected to strengthen its dominance in the global LNG market.
  • Indian oil and gas companies are actively exploring long-term LNG contracts with US suppliers.

Conclusion: Energy as a Core Pillar

Energy remains a central aspect of India-Qatar relations. Both nations are exploring ways to strengthen and expand their energy partnership, including potential mutual investments, as highlighted in the recent discussions between PM Modi and Al-Thani.