Qatar, one of the world’s largest exporters of liquefied natural gas (LNG), is facing a major challenge in securing long-term gas deals with two of its biggest potential buyers—China and India. As both countries push for cheaper prices and more flexible contracts, Qatar’s ambitious plans to dominate the LNG market are running into resistance at a crucial time.
This development is significant because Qatar is in the middle of a major expansion of its gas production capacity. It hopes to increase exports substantially over the next decade and secure its position as a global energy superpower. But changing market conditions, increased competition, and shifting priorities among buyers are now testing Qatar’s strategy.
Asian Buyers Are Changing the Game
China and India are two of the fastest-growing energy markets in the world. Their demand for LNG is expected to rise steadily in the coming years as both nations move to cleaner fuels and reduce their dependence on coal. This has made them key targets for Qatar’s gas exports.
However, both countries are now pushing back on Qatar’s standard pricing model. Instead of accepting long-term contracts with fixed prices linked to oil benchmarks—as Qatar traditionally offers—buyers from China and India are asking for lower rates and more flexible contract terms.
In recent negotiations, Chinese companies have been requesting LNG contracts priced around 13% of the Brent crude oil benchmark, which is lower than what Qatar typically offers. India is also seeking more competitive prices and contracts that allow for delivery flexibility and destination freedom—meaning they want the ability to redirect cargoes if needed.
This change in stance from Asia’s top energy consumers signals a shift in global LNG trade dynamics. Buyers are no longer willing to accept strict long-term deals without negotiating terms that suit their national interests and financial limits.
Qatar’s Expansion and Rising Competition
Qatar’s LNG expansion project, known as the North Field expansion, is set to boost the country’s output from 77 million metric tons per year to 126 million metric tons by 2027. It is one of the largest and most expensive LNG developments in the world, and Qatar needs firm buyers to justify the investment.
But the timing of this expansion has coincided with increased competition in the global gas market. The United States, for example, has emerged as a major LNG supplier, offering competitive prices and flexible contract terms. American gas producers often sell through shorter contracts with less restrictive delivery conditions, which appeals to many Asian buyers.
The United Arab Emirates (UAE) is also making moves to grow its gas exports, offering even more flexibility to attract long-term buyers. With so many options on the table, buyers like China and India now have greater leverage in negotiations.
This competitive environment is putting pressure on Qatar to rethink its approach. While its LNG is known for being reliable and of high quality, it may not be enough to win over buyers who are increasingly focused on price and flexibility.
India’s Recent Moves in LNG Procurement
Even though India has asked for better pricing from Qatar, it is also taking steps to secure its energy future through new and diversified contracts.
GAIL (India) Ltd, the state-owned gas company, is preparing to start receiving LNG shipments from Qatar under a new five-year agreement starting April 2025. This deal includes 12 cargoes a year and shows that India still sees value in Qatari gas—just not at any cost.
GAIL has also signed agreements with other global suppliers, including Vitol Asia and ADNOC Gas, to expand its LNG portfolio. These deals are part of a broader effort by India to lock in stable supplies of LNG to meet its growing energy needs and reduce the impact of global price fluctuations.
In a major development, India also renewed a long-term LNG import agreement with Qatar for an additional 20 years. The updated contract features lower pricing, resulting in potential savings of over $6 billion for India over the life of the deal. The extension ensures supply stability while aligning with India’s need for affordability.
This extension highlights a growing trend: while India values reliable supply from Qatar, it is no longer willing to sign contracts without negotiating more favorable terms.
China Looks for Diverse Suppliers
Like India, China is also widening its net when it comes to LNG procurement. While Chinese companies are negotiating with Qatar, they are also signing deals with other producers.
Qatar recently struck a major LNG agreement with Shell to deliver three million metric tons of gas per year to China starting in 2025. While this deal shows continued interest in Qatari gas, it also underlines that China is spreading its supply risk by working with a mix of suppliers.
This diversification strategy reflects China’s broader energy security policy, which aims to prevent overdependence on a single supplier. It gives Chinese companies more options and more negotiating power when dealing with big exporters like Qatar.
The Bigger Picture: A Buyer’s Market?
The growing resistance from China and India could signal a shift toward a more buyer-friendly LNG market. For years, Qatar and a few other countries dominated LNG supply with rigid contracts that favored sellers. But the rise of new exporters and the global push for energy security and diversification have changed the balance.
Now, buyers are asking for:
- Lower prices, especially in long-term deals
- Flexible delivery schedules
- Freedom to resell or redirect cargoes
- Shorter contract durations
For Qatar, this means it may need to adjust its business model if it wants to maintain its position as a leading LNG supplier in Asia. That could involve rethinking pricing strategies, offering hybrid contract options, or even investing in downstream projects in buyer countries to strengthen ties.
Looking Ahead: Adapt or Risk Falling Behind
Qatar is not used to being in this position. Its gas exports have long been in high demand, and its reputation for reliability has helped it secure long-term deals with major global players. But the market is changing—and fast.
The success of its massive expansion project depends on its ability to adapt to the new rules of the game. Qatar must decide whether to stick to its traditional model or evolve to meet the expectations of the modern LNG buyer.
The next few months could be crucial. If Qatar fails to secure long-term buyers for its new capacity, it could face a supply surplus—something that would hurt revenues and weaken its dominance in the global LNG space.
On the other hand, if it can strike the right balance between profitability and flexibility, Qatar may still lead the next era of LNG trade. But that will require listening to its customers and embracing a more competitive, open-market approach.
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