State-owned gas utility GAIL India Ltd today said it has signed an agreement with Russia's Gazprom to buy 2.5 million tonne per annum of gas for 20 years.
GAIL "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," the company said in a press statement here.
Under the terms of the agreement, GAIL will receive 2.5 million tonne of LNG per annum (equivalent to about 130 million British thermal unit or 3.5 billion cubic metres or 122 billion cubic feet per annum) over a period of 20 years beginning 2018-19.
LNG will come from Gazprom's Shtokman production facilities, which has 130 trillion cubic feet of inplace reserves.
This would be "optimised and supplemented by GM&T's global trading portfolio and capabilities," it said.
"Under the contract, LNG will be sustainably priced with an oil-indexed formula and delivered to Dahej, Dabhol and Kochi terminals in India," GAIL said, without giving the price details.
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Commenting on the development, GAIL Chairman and Managing Director B C Tripathi, "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 development of the Indian market for which $6 billion investments are being made in creating natural gas infrastructure," he said.
Speaking on the partnership, Gazprom Marketing & Trading CEO Vitaly Vasiliev 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."