Petronet signed Agreement with Russia’s Gazprom to buy 2.5 million tonnes LNG a year

India's largest liquefied natural gas (LNG) importer, Petronet LNG announced on 1 June 2011 that it signed an agreement with Gazprom of Russia on 30 May 2011 for buying up to 2.5 million tonnes of LNG a year. The pact clearly mentions that the agreement will be implemented in letter and spirit only when Gazprom has spare LNG available and if the price and other terms and conditions are agreeable between the two parties.

Under the terms of the agreement, Petronet will receive up to 2.5 million tonnes annually of LNG for up to 25 years from the international supply portfolio of Gazprom Marketing and Trading Singapore (GM&TS).

Currently Gazprom has no spare LNG to sell to India and all of its 1.6 million tonnes of gas in its liquid form was tied up for shipping to customers. The MoU is being considered a part of the strategy on the part of Gazprom to show to the world that it was talking to major consumers like China and India for selling LNG.

Petronet presently buys 7.5 million tonnes a year of LNG from RasGas of Qatar on a long-term contract. The gas is cooled to sub-zero temperature to turn it into liquid. LNG is imported in cryogenic ships at its facility at Dahej in Gujarat. This is then re-converted into gas and sold to consumers.