GAIL India has signed a legally binding 20-year liquefied natural gas (LNG) sales and purchase agreement (SPA) with Gazprom Marketing and Trading Singapore (GM&TS), a 100% wholly-owned subsidiary of Gazprom Marketing & Trading.
Under the terms of the agreement, GAIL will receive 2.5 million tones of LNG per annum (equivalent to approximately 130 million MMBtu or 3.5 bcm or 122 bcf per annum) over a period of 20 years expected to start from year 2018-19. LNG will come from Gazprom’s Shtokman production facilities (130 tcf reserves), optimized and supplemented by GM&T’s global trading portfolio and capabilities. Under the contract, LNG will be sustainably priced with an oil-indexed formula and delivered to Dahej, Dabhol and Kochi terminals in India.
This agreement is a key milestone for both GAIL and Gazprom which reaffirms both their strong corporate partnership in developing India as one of the core markets for LNG business, and the Indo-Russian trade relationship. This deal will lead to introducing a favorable market GAIL is thus introducing World’s largest LNG reserves in LNG market
Commenting on the development, Mr. B. C. Tripathi, Chairman & Managing Director, GAIL (India) Limited said, “This long-term LNG supply agreement with Gazprom, which holds the world’s largest gas reserves, is another milestone in Indian-Russian Energy Cooperation. The deal with Gazprom reinforces GAIL’S commitment to facilitate the development of the Indian market for which US$6 billion investments are being made by GAIL in creating Natural Gas infrastructure.
“The deal is introducing one of the world’s largest gas reserves to the global LNG market, thereby creating an environment for competition. It also marks GAIL’s efforts to create a well-diversified and secured supply portfolio to meet the ever growing energy requirements of the Indian economy and enable sustainable long-term growth for GAIL”.
Speaking on this partnership, Vitally Vasiliev, CEO of Gazprom Marketing & Trading said: “We are delighted to have signed this agreement with GAIL, during a period of rising demand for LNG in India. We are looking forward to working together with GAIL to help meet India’s expanding gas demand whilst securing a long-term market for Russian gas.
“We recognize GAIL’s strength as the major gas player within India, enabling flexible access to a rapidly developing market and are confident that this SPA will further strengthen our already well-established LNG trading relationship.”
LNG World News Staff, October 1, 2012; Image: Gazprom M&T