India-Qatar Diplomatic Spat

The recent death sentences handed down to eight former Indian Navy personnel by a Qatari court pose a significant challenge to the traditionally amicable ties between New Delhi and Doha.
In international relations, trade dynamics often play a pivotal role, and in the case of India and Qatar, the balance of trade is heavily skewed in Qatar’s favor, primarily due to imports.

LNG Dependency and Diplomacy

Trade Imbalance: Qatar enjoys significant leverage in the bilateral relationship because the trade balance is weighted heavily in its favor, with imports from Qatar far exceeding India’s exports.
LNG Dominance: Liquefied natural gas (LNG) is at the heart of this trade relationship, accounting for nearly 50% of India’s imports by value from Qatar.
Energy Security: India’s import dependency on natural gas is around 50%, and with a national drive to increase natural gas consumption, LNG imports are expected to grow, even with potential increases in domestic production.

Cleaner Alternative: Natural gas is viewed as a cleaner and more affordable alternative to conventional petroleum fuels, aligning with India’s efforts to reduce carbon emissions and transition to cleaner energy sources.
Energy Security: Given India’s high import dependency on crude oil, natural gas is seen as a critical component of energy security.
Ambitious Targets: India aims to raise the share of natural gas in its primary energy mix to 15% by 2030, a goal likely to drive increased LNG imports in the years ahead.

Diplomatic Challenge: The case of the retired Navy personnel presents a sensitive challenge for Indian diplomacy, given India’s energy security concerns and ambitions.
Trade Dependency: India’s energy security relies on Qatar, making diplomatic relations delicate.

Imports from Qatar: In FY2022-23, India’s total imports from Qatar were valued at $16.81 billion, with LNG accounting for $8.32 billion or 49.5%.
Exports to Qatar: In contrast, India’s exports to Qatar in the same period amounted to only $1.97 billion.
LNG Dependency: Of the 19.85 million tonnes of LNG imported by India in FY23, 10.74 million tonnes (54%) came from Qatar.

Seller’s Market: The global LNG market has become a seller’s market following geopolitical disruptions, such as Russia’s invasion of Ukraine.
Term Contracts vs. Spot Purchases: Term contracts offer more stability compared to spot purchases, particularly during supply gluts or shortages.
Qatar’s Position: Qatar, as the world’s largest LNG exporter, has gained significant leverage and stability in the LNG market.
Long-Term Contracts: LNG importers worldwide, including India, are seeking long-term contracts with major suppliers like Qatar to secure stable supplies.

Long-Term Contracts: India is actively negotiating for long-term LNG contracts, and Petronet’s existing contract with Qatar is set to expire in 2028.
Buyer’s Market: Industry experts predict that the global LNG market may become a buyer’s market in the coming years due to new LNG export projects. Qatar remains a key player in this scenario.

Balancing India’s energy security needs with diplomatic challenges in the backdrop of trade dependency on Qatar, especially in LNG, is a complex task.
India’s pursuit of long-term LNG contracts reflects its determination to secure stable energy supplies while navigating international relations sensitively.
The evolving global LNG market dynamics will continue to influence India’s energy choices and diplomatic strategies.