GS Paper II

News Excerpt:

Qatar seeks more gas deals in Europe and Asia, anticipating continued demand growth as it embarks on a multibillion-dollar project to expand exports.

Current status of Qatar’s LNG production and exports:

• Qatar was the third-biggest exporter of LNG in 2023, after the US and Australia, according to S&P Global Commodity Insights data.
• It raised the size of its gas reserves by about 14% to 2 quadrillion cubic feet after new discoveries at its vast North Field gas field, and significant quantities were extractable on its west side.
• It plans an 85% expansion in LNG output from its North Field by 2030.
• It would control nearly 25% share of the global market by 2030 and squeeze out rival projects including in the United States.
• Qatar's plans follow the Jan 26 announcement by the Biden administration to pause approvals for pending and future applications to export LNG from new projects in the US.

Major reason behind the LNG expansion:

• Asian economies are switching from coal as part of efforts to cut carbon dioxide emissions.
• Qatar has secured two huge gas supply deals with China over the past 15 months. It has also signed deals with European companies.
• According to the International Energy Agency’s gas market report for Q1 2024, Qatar's LNG ramp-up comes amid growing demand for gas, which is set to grow by 2.5% or 100 Bcm (3531 Bcf) in 2024; Qatar accounted for 20% of LNG volumes in 2023.
• Qatar is geographically well-positioned to meet the current high demand in Northeast Asia in China, Japan, and Korea. In the future, demand will only grow in the region of South Asia, especially in India.
• Population growth in Asia, an economic recovery worldwide, and more contracts in Europe drive the demand for LNG.

India-Qatar Commercial Relations:

• India's bilateral trade with Qatar in 2022-23 was US$ 18.77 billion. India’s exports to Qatar during 2022-23 were US$ 1.96 billion, and India’s imports from Qatar were US$ 16.8 billion. 
  • Qatar’s key exports to India include LNG, LPG, chemicals and petrochemicals, plastics, and aluminium articles.
  • India’s key exports to Qatar include cereals, copper articles, iron and steel articles, vegetables, fruits, spices, and processed food products, electrical and other machinery, plastic products, construction material, textiles & garments, chemicals, precious stones and rubber. 
• India is among the top three largest export destinations for Qatar (China and Japan being the other two) and is also among the top three sources of Qatar’s imports, along with China and the US.

• Qatar is also India’s largest supplier of LPG (5.33 MMT for US$ 4.04 billion in FY 2022-23), accounting for 29% of India’s total LPG imports. 
• Qatar is the largest supplier of LNG to India (10.74 MMT for US$ 8.32 billion in FY 2022-23), accounting for over 48% of India's global LNG imports. 
  • A long-term contract LNG Sale and Purchase Agreement was signed in February 2024 during the visit of Qatar’s Minister of State for Energy Affairs to India to participate in the India Energy Week 2024.

Conclusion:

Qatar's expanding LNG production aligns with India's growing energy needs, strengthening their economic ties. India's strong bilateral trade relations with Qatar, especially in LNG, underscore their strategic partnership. The long-term LNG agreement signed in 2024 reflects the deepening cooperation, ensuring a stable energy supply and fostering mutual growth.