India receives cheapest LNG as Russia's Gazprom begins supplies
The Russian rate is USD 1.5 per mmBtu less than the price at which Qatar’s RasGas, India's oldest supplier, used to deliver LNG.
India on June 4, 2018 received its cheapest LNG (Liquefied Natural Gas) as Russian company Gazprom began shipping natural gas under a long-term deal. As per the sources, Gazprom is providing LNG at around USD 7 per mmBtu.
Price Comparison with other LNG suppliers
• The Russian rate is USD 1.5 per mmBtu less than the price at which Qatar’s RasGas, India's oldest supplier, used to deliver LNG.
• Russian supplies are also cheaper by USD 1 to USD 1.5 per mmBtu than the LNG sourced from Australia’s Gorgon LNG and the United States.
• LNG carrier 'LNG Kano', carrying a cargo from Russian supplier Gazprom, ported at Petronet LNG's import facility at Dahej, Gujarat.
• Gazprom supplied the 3.4 trillion British thermal unit (TBtu) of cargo from Nigeria. The LNG cargo was received by Oil Minister Dharmendra Pradhan.
• India will import LNG worth an estimated USD 25 billion during the contract period from Russia.
• India is pushing towards a gas-based economy by raising the share of environment friendly fuel in the energy sector from current 6.2 percent to 15 percent. India is dependent on imports to meet 45 percent of its gas needs.
Supplies from Russia come within weeks after India began importing its first ever LNG cargo from US under a long-term import deal. LNG imports from Russia have added a new dimension to the Indo-Russian bilateral relations, particularly in the oil & gas sector.
In the last few years, Indian companies have made investment of more than USD 10 billion in acquiring varying stakes in strategic Russian projects including Sakhalin-1, Vankorneft and Taas-Yuryakh.
Moreover, a Russian company led consortium committed an investment of USD 13 billion in Esaar Oil in 2016.
Gazprom-GAIL India Deal
• State-owned GAIL India Ltd had signed the original deal with Gazprom Marketing and Trading Singapore Pte Ltd (GMTS) on August 29, 2012.
• GAIL India, in January 2018, took advantage of Gazprom's inability to deliver LNG from the previously agreed Schtokman project in the Barents Sea and renegotiated price agreed in 2012.
• GAIL renegotiated the terms of the 20-year deal to import 2.5 million tonnes of LNG a year.
• Now, the contracted volume has been lowered from 2.5 million tonnes to 0.5 MT in the first year 2018-19; 0.75 MT in 2019-20; 1.5 MT in the third year 2020-21.
• The company is committed to import the full 2.5 MT a year by the fourth year.
• Under the re-worked deal with Gazprom, the duration of the contract has been extended by three years and GAIL has agreed to buy an additional six million tonnes of LNG volumes.
• Gazprom is a global energy company focused on geological exploration, production, transportation, storage, processing and sales of gas, sale of gas as a vehicle fuel, as well as generation of heat.
• The company holds the world’s largest natural gas reserves and its share in the global and Russian gas reserves amounts to 17 and 72 percent respectively.
• It is Russia’s largest producer and exporter of liquefied natural gas (LNG) and is successfully expanding its LNG sales within the existing Sakhalin II project.
• It has established its subsidiaries in the USA, Singapore, France, the Netherlands and Switzerland.