India tempts Qatar with airline bilaterals carrot to secure cheaper LNG

Written by Amitav Ranjan | Mihir Mishra | New Delhi | Updated: Nov 13 2013, 16:07pm hrs
Qatar AirwaysAfter allowing Abu Dhabi fourfold increase in airline seat entitlements, Centre is likely to do the same for Qatar (Fe Photo)
After allowing Abu Dhabi a near fourfold increase in bilateral airline seat entitlements, the Centre is likely to do the same for Qatar. India, though, is looking to extract concessions in the form of a discount on LNG supplies from the West Asian country in lieu of any increase in the cap on the number of flights between the two nations.

National security adviser Shiv Shankar Menon has proposed that India seek a discount on LNG supplies from Qatar as a precondition to allowing its national airline an increase in weekly seat entitlements, a move that could potentially help Qatar Airways earn close to $200 million over 10 years.

At a meeting on October 29, Menon suggested that Indias Petronet LNG (PLL) negotiate a long-term price for an extra 3 million tonnes of LNG from Qatars Ras Laffan Liquefied Natural Gas (RasGas) to match the concessions that could arise from the increase in seat sharing with Qatar Airways. At a meeting of the ministries called by the PMO, the civil aviation ministry had been instructed to work out details pertaining to the number of seats that could be increased, said a senior civil aviation ministry official who attended the meeting. Present at the meeting were officials from the petroleum and natural gas and the external affairs ministries as also officials from the department of industrial policy and promotion.

Qatar has been seeking a steep expansion in weekly seat entitlements to its hub in Doha, from the current 24,800 to 72,600, with the aim of creating a hub in West Asia for Indian outbound travelers.

The hub will compete with Dubai and Abu Dhabi. Even as Qatar has exhausted a large part of the existing entitlements, Indian carriers have been able to utilise less than 10,000 weekly seats.

In the wake of Menons proposal, PLL officials said they estimate a discount of 10-12 cents per million British thermal units on the extra three million tonnes per annum spread over 10 years that could offset the revenue loss to Indian carriers on account of increased seats to Qatar Airways. The proposed contract would be over and above the 7.5 million tonnes per annum of LNG that PLL signed with RasGas in 1999, said PLL officials.

Sources said finance minister P Chidambaram had favoured enhanced bilateral rights for Qatar Airways and Indian carriers at the next meeting with Doha, which is willing to invest up to $3 billion each year in India. Qatar has offered to reinvest $3 billion each year from its crude oil and LNG sales as FDI and as portfolio investment. It also offered to buy Asian Development Banks 5% stake in PLL.

Discussions on increasing bilateral entitlements with Qatar come after India allowed a big increase in bilateral entitlements from 13,000 to 49,000 weekly seats between India and Abu Dhabi in April this year. One of the key factors that swayed the increase in Abu Dhabis favour was a commitment to invest about $50 billion in Indias infrastructure sectors in the coming years.


* Qatar wants to raise seat entitlements from 24,800 to 72,600 to create a Doha hub

* National security adviser has proposed that India seek cheaper LNG in return

* Petronet estimates 10-12 cents discount per mmBtu spread over 10 years

* Qatar has used most of its entitlements, Indian carriers have used only 10,000 seats