India on Tuesday signed its biggest ever USD 78 billion deal to extend LNG imports from Qatar by another 20 years till 2048 at lower than current rates, helping save an estimated USD 6 billion over the life of the contract.

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Petronet LNG Ltd, India's biggest liquefied natural gas (LNG) import, in a statement said it has signed a deal to extend the deal to buy 7.5 million tonnes a year of gas for producing electricity, making fertilizer and converting to CNG, with QatarEnergy on the sidelines of India Energy Week in Goa.

Sources said the renewal is at a "significantly" lower price than the current deal. At current prices, India will save about USD 0.8 per million British thermal unit at the renewed terms. This translates into savings of USD 6 billion over the contract period.

The 1999 deal with RasGas, now merged in QatarEnergy, was the first contract that India ever signed for import of gas in its liquid form in cryogenic ships. Supplies under the 25-year deal started in 2004 and the contract was to end in 2008.

"I was very happy to join HE Saad Sherida Al-Kaabi, Minister of State for Energy Affairs, Deputy Chairman and President & CEO @qatarenergy for the signing of a long term contract for LNG sale & purchase agreement (LNG SPA) for purchase of around 7.5 MMTPA LNG between @PetronetLNGLtd & QatarEnergy today.

"This contract will provide momentum to India's journey towards energy self-sufficiency under the farsighted leadership of PM @narendramodi Ji as India is transitioning into a gas based economy by increasing the share of gas in energy mix from 6% to 15% by 2030," Oil Minister Hardeep Singh Puri tweeted.

Subsequent to the Qatar deal, India signed deals to buy LNG from Australia, US and Russia.

Qatar, the world's second largest LNG exporter, plans to expand its liquefaction capacity to 126 million tonnes per year by 2027 from 77 million and renewal of deal with India was important for it.

Petronet currently imports 8.5 million tonnes a year of LNG from Qatar under two contracts. The first 25-year deal is to expire in 2028 and has now been extended for 20 additional years. The second deal for 1 million tonnes a year, entered into in 2015, will be negotiated separately, sources said.

As per the 1999 deal for 7.5 million tonnes, the renewal was to have been agreed five year prior to the end of the supply term. That deadline was in December 2023.

The two sides had been engaged in intense negotiations over the last few months. There were heightened tensions when a Qatar court sentenced eight former Indian Navy officials to deal in October for allegedly spying for Israel. In December-end, their sentence was reduced.

Qatar's energy minister and top officials of QatarEnergy are attending the IEW here.

India, the world's third biggest energy consumer, sees natural gas as a transition fuel for migrating to net zero carbon emissions by 2070. As part of this, the government is targeting to raise the share of natural gas in the country's energy mix to 15 per cent by 2030 from 6.3 per cent now.

Sources said the current deal is priced at 12.67 per cent of prevailing Brent crude oil prices plus a fixed component of USD 0.52 per million British thermal unit.

Under the new contract, the slope would remain more or less the same but the fixed charge of USD 0.52 would be scrapped, they said.

Also, India will save an additional USD 0.30 per mmBtu on shipping charges as Qatar has agreed to convert the deal to Delivered Ex Ship (DES) from Free on Board (FOB), thereby undertaking responsibility of shipping.

At USD 80 per barrel Brent crude oil price, the annual 7.5 million tonnes import will cost USD 3.9 billion annually and over a 20-year period it would total to over USD 78 billion.

"Petronet LNG Limited (PLL) has successfully concluded and executed a LNG sales and purchase agreement (LNG SPA) for purchase of around 7.5 million tonnes per annum of LNG with QatarEnergy on long-term basis today," the company said in a statement.

This, it said, was pursuant to extension of an existing LNG SPA for LNG supply of around 7.5 million tonnes on FoB or free on board basis (where the buyer arranges for shipping of the cargo), signed on July 31, 1999.

Supplies started in 2023 and were to last till 2028.

"We are here to serve the market in India and we hope to be part of the expansion of the economy and requirements and the energy sector," said Qatar's energy minister Saad al-Kaabi, who is also QatarEnergy's CEO.

"Under the new agreement, LNG supplies will be made on delivered (DES) basis commencing from 2028 till 2048," Petronet said.

Akshay Kumar Singh, CEO, Petronet said, "the existing long-term agreement between Petronet and QatarEnergy today accounts for around 35 per cent of India's LNG imports and is of national importance.

"Renewal of this agreement is a step towards achieving the vision of Prime Minister of India to make India a gas based economy and increase share of natural gas in India's primary energy basket to 15 per cent by year 2030." While 7.5 million tonnes a year of LNG is bought by Petronet, IOC, BPCL and GAIL buy a combined 1 million tonnes a year of LNG.

Sources said the new deal will allow the Indian buyers to decide which terminal in India will receive cargoes. Under existing deals, Qatar delivers LNG at Dahej in Gujarat.

Sources said the freedom to decide on the arrival terminal will result in additional savings in cost for transporting the fuel through pipelines within the Indian grid.