How Qatar's Leverage Over India, Through Our Crippling LNG Dependency, May Soon End

India's reliance on Qatar for liquefied natural gas (LNG), gas that has been super cooled to liquid form so that it can be transported by sea, may be set to diminish as the Cabo Delgado gasfield in Mozambique, partly owned by Indian energy firms, is gearing up to resume operations.

This shift comes at a time when the sentencing of eight former Indian Navy personnel to death by a Qatari court has put a strain on the historically friendly ties between New Delhi and Doha.

The LNG project in Mozambique, where Indian public sector oil and gas companies have a 30 per cent stake, had been halted since April 2021 due to security concerns.

The resumption of the $20 billion Mozambique LNG project, which Union Petroleum Minister Hardeep Singh Puri reviewed today, is anticipated to enhance India's energy security.

On Monday (30 October), Union Petroleum Minister Hardeep Singh Puri reviewed the 7500 hectare site of the Liquefied Natural Gas (LNG) project in Mozambique.

Puri said that the project will improve India's energy security and help the country in achieving energy sufficiency.

"When the strategically important $20 billion LNG Project starts, it will dramatically improve India’s energy security & significantly contribute towards India’s journey to achieve energy sufficiency under the visionary leadership of PM Narendra Modi," Puri said in a post on social media platform X.

The project, had been under force majeure after attacks by Islamic State terrorists in the region. However, with the improved security situation, the Mozambican government has given the green light for operations to restart.

This comes as India's current energy landscape is heavily influenced by its LNG imports from Qatar.

Qatar is the largest supplier, accounting for more than half of India's LNG imports. The trade relationship is such that LNG makes up almost 50 per cent of the total value of imports from Qatar to India.

This dependency gives Qatar a significant leverage over India, especially in the context of the recent sentencing of eight former Indian Navy personnel to death by a Qatari court.

India's dependency on Qatari LNG is evident from the trade data of the fiscal year 2022-23, where LNG imports alone were worth $8.32 billion out of India’s total imports worth $16.81 billion from Qatar.

India imported a total of 19.85 million tonnes of LNG in FY23, of which 10.74 million tonnes, or 54 per cent, came from Qatar, the trade data show. This means that apart from the 8.5 million tonnes of LNG that Qatar supplied as part of the term contract with Indian PSU Petronet LNG, nearly 2.25 million tonnes of additional gas was purchased from Qatar on spot basis last year.

The recent judicial developments in Qatar have only heightened the urgency for India to seek alternative sources of LNG to rebalance the trade and diplomatic equation.

In this backdrop, the operationalisation of the Mozambique gasfield, which is one of the largest gas deposits in the world, is likely to have a substantial impact on the LNG market in India, potentially leading to more competitive prices and giving India more negotiating power in its trade and diplomatic engagements with Qatar.

The Indian government has been actively seeking to diversify its energy sources, and the resumption of the Mozambique project is a significant step in this direction.

While the transition away from Qatari LNG may take time, the commencement of LNG supplies from Mozambique is a move towards ending the disproportionate leverage that Qatar currently holds over India due to the LNG trade.

The Mozambique LNG project is not just about energy; it's about strategic autonomy and the re-balancing of trade and diplomatic relations on a global scale.