Equinor has signed a 15-year agreement to supply LNG to India’s Deepak Fertilisers, which will use the gas mainly as a feedstock for ammonia production at a new plant, the Norwegian energy major said on Monday.
Equinor is growing its LNG portfolio and will use the super-chilled fuel from its operated Hammerfest LNG export plant in Norway and LNG sourced primarily from the United States, the company said.
Under the deal with Deepak Fertilisers, Equinor will deliver 0.65 million tons of LNG for 15 years starting in 2026.
Deepak Fertilisers will use the gas to produce ammonia – a key fertilizer ingredient – for domestic use at its newly commissioned plant for manufacturing fertilizers and petrochemicals.
“Deepak’s new ammonia plant has created new gas demand in the growing Indian market,” said Helge Haugane, Equinor’s Senior vice president for Gas & Power.
“We look forward to developing our relationship with Deepak and to exploring avenues for further collaboration on petrochemicals feedstocks such as propane and ethane and on low carbon ammonia in the future.”
The long-term deal with Deepak Fertilisers follows one of the biggest-ever natural supply deals for Norway’s energy giant worth an estimated $54 billion (50 billion euros). In December, Equinor signed an agreement to supply Germany’s state-controlled firm Securing Energy for Europe (Sefe) with around 10 billion cubic meters of natural gas per year from January 1, 2024, until 2034, plus an option for another 5 years, at terms reflecting market prices.
For Indian firms, securing LNG supply is crucial as consumption of natural gas in industrial activities is set to soar.
India’s industry expansion and rising oil refining to meet higher fuel demand are set to drive a tripling of the country’s natural gas consumption by 2050, the U.S. Energy Information Administration (EIA) said last week.
In 2022, India’s gas consumption amounted to 7.0 billion cubic feet per day (Bcf/d), with over 70% of the demand coming from the industrial sector. By 2050, India’s natural gas consumption is set to more than triple to 23.2 Bcf/d, according to EIA’s estimates.
By Charles Kennedy for Oilprice.com
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