The first liquefied natural gas (LNG) cargo from Russian energy major Gazprom will land in India in May, following an agreement in January with India’s state-owned gas supplier and developer GAIL India to bring down prices based on a new formula.
The latter is also planning to bring at least 80 cargoes of US LNG in the current financial year. “We expect the first set of LNG cargoes from Gazprom to come in the first half of May. We have re-negotiated the prices with them on the basis of a fresh formula,” said an official aware of the development.
The contract for a long-term deal mandates that GAIL (India) will purchase about 2.5 million tonnes (mt) of LNG from Gazprom per annum. This comes a few weeks after India’s first LNG cargo from the US landed at the Dhabol regasification terminal in Maharashtra.
GAIL has already signed a $32-billion deal with the Dominion Energy Cove Point project in Maryland and the Cheniere Energy’s Sabine Pass project in Louisiana for a supply for 20 years.
“The plan is to bring 80 more cargoes in the current financial year, to the tune of around 5 mt,” he said. Asia gets about 70 per cent of global LNG shipments every year, with India being the fastest-growing market.
GAIL is in talks with new fertiliser plants for the supply of imported LNG and also trying to market it to anchor customers such as refineries, power plants and petrochemical units near its planned and existing pipelines.
GAIL India has entered into long-term contracts with global companies to bring LNG from various markets, expecting a rise in demand from the power sector.
But, contrary to its expectations, the number of takers for LNG has declined over the years owing to cheaper power from sources like solar energy. As a result, about 25,000 MW of installed gas-based power plants are stranded.
Cheniere Energy had entered into a sale and purchase agreement (SPA) with GAIL in December 2011 to sell about 3.5 mt of LNG per year to the latter.“With both these LNGs coming into our fold, we are set to become one of the largest suppliers in the world,” the official said. As part of the strategic energy partnership between President Donald Trump and Prime Minister Narendra Modi last year, both India and the US have agreed to co-operate in oil and gas, power, renewable energy, and coal.business-standard.com