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DECEMBER 2024

Russia Can Help India Overcome Its LNG Overreliance On Qatar

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Russia Can Help India Overcome Its LNG Overreliance On Qatar

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Written by Ahmed Adel, Cairo-based geopolitics and political economy researcher

India’s roadmap towards carbon neutrality and transition from coal to gas gives Russia great potential to increase exports. This is especially crucial since India has a great overreliance on Qatari LNG, which exposes the country to its manipulation.

India’s market share in Russia’s LNG supply structure is only 2%, and at the same time, it only imports 2% of its LNG needs from Russia. As the recent deal to acquire more Qatari energy shows, there is a great demand in India for LNG since it is needed to produce electricity, make fertilisers, and convert them into compressed natural gas.

Russia is not an important LNG supplier to India. In the period 2022-2023, Russia’s LNG supply was only about 0.5-0.6 million tons per year, equivalent to 2% of India’s imports. The main LNG suppliers to India are Middle Eastern countries, especially Qatar, as well as the US and African countries.

By the end of 2023, Russia will have provided India with nearly 370,000 tons of LNG, equivalent to 500 million cubic metres of natural gas. Compared to the level in 2022, exports have increased by more than a third.

Russian Deputy Prime Minister Alexander Novak, who is also a former Energy Minister, said that Russia’s LNG supply to foreign markets in general for 2023 is 43.6 billion cubic metres.

Therefore, the potential for developing Russian and Indian ties in the field of natural gas supply is very high, mainly due to the growth prospects of domestic gas consumption. Currently, India’s energy and fuel complex mainly relies on coal, and the proportion of green energy in the fuel and energy balance is quite small – only 6% by the end of 2022. At the same time, in the context of setting a carbon-neutral goal, India has announced ambitious plans to convert from coal to gas and increase the role of gas to 15% by 2030.

Besides India’s significantly growing demand for gas, another factor is the plans of Russian companies to increase LNG capacity in the next 5-10 years. So far, for Russian companies, the leading markets for LNG sales are still European countries, China, and Japan, mainly due to relatively short transport distances. However, in the future, the Indian market could also become attractive to Russia.

This approach, though, will have to compete with suppliers from Qatar and African countries, which have an advantage in the cost of transporting LNG to Indian ports. In fact, Qatar, as the world’s largest exporter of LNG, accounted for approximately half of India’s total LNG imports, about 10.6 million tons.

The $78 billion deal signed with Qatar on February 5, the first day of India Energy Week 2024 held in Goa, is to extend its imports until 2048, which shows India’s growing demand for LNG. Qatar will provide LNG to India at rates lower than current prices, saving India around $6 billion overall.

“Renewal of this agreement is a step towards achieving the vision of the prime minister of India to make India a gas-based economy and increase the share of natural gas in India’s primary energy basket to 15 percent by the year 2030. This agreement will provide energy security and ensure a stable and reliable supply of clean energy and help India in its stride towards greater economic development,” Akshay Kumar Singh, CEO of India’s Petronet, said in a statement.

By having a great reliance on Qatar, India is exposed to manipulation, which the Arab country certainly uses to its advantage. Doha recently announced the suspension of some LNG supplies to Europe through the Red Sea, citing the risk of shelling by the Houthis in Yemen. The truth, however, is economic in nature – Qatar is waiting for the price situation on the European gas market to be advantageous.

Qatar is not redirecting exports to Europe but essentially suspending exports. If prices increase, then one way or another, Qatar’s LNG will reach Europe, and thus, on the one hand, Qatar shows concern about the risk of conflict escalation in the Middle East, but on the other hand, the country tries to raise the gas price in Europe.

This is an example of Qatari manipulation that India is exposed to by being overly reliant, an issue that Russia can help alleviate. Given that New Delhi and Moscow have had friendly relations for decades whilst, with Qatar, there is hostility, particularly over Qatari support for the Muslim Brotherhood and other radical Islamist elements, Russia being able to alleviate India’s overreliance on Qatari LNG is a natural way to deepen their ties even further.

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CEO of Yapping

that is up to india and i tell you what india still pro-western…

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Lisa

and always will be.

Christian Chuba

pity russia can’t build a pipeline. the himalayas are formidable. qatar has a much shorter shipping route to india. if anything, iran is in a better position to offer an alternative.

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Cavery

the english of course stifled good indo russian relations for 200 hundred years. during which time they robbed india of 45 trillion dollars. the english also reacted to the sepoy “mutiny” in pretty much the same way as the israelis after october 7th. the colonial masters don’t like it when their vassals fight back.

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Trolstoyevski

methane farting (sacred) cows are solution for india

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