Ahmedabad: Gazprom Global LNG has signed accords for the long-term supply of liquefied natural gas (LNG) to GAIL (India) Ltd, Gujarat State Petroleum Corp. Ltd (GSPC) and Petronet LNG Ltd.
The deals have been signed through affiliate Gazprom Marketing and Trading Singapore Pte Ltd (GM&TS), a fully owned unit of Gazprom Marketing and Trading.
The Russian oil and gas company will supply 2.5 million tonnes per annum (mtpa) to each of them, the company said on its website. The current installed capacity at the two operational terminals at Dahej and Hazira in Gujarat is close to 14 mtpa, or nearly 50 million cubic metres a day (mcmd). While prices are yet to be negotiated, the supply will start from 2016 for 25 years. The Petronet supply deal was reported by Mint on Thursday.
The total demand for gas in India is 180 mcmd and this is expected to rise to 325 mcmd by 2015, according to an industry expert close to the development.
“Of this, half the demand will be met by domestic gas, whereas half would be from imports (LNG). Currently, a major part of the North and West are covered by pipelines, and with laying of more pipelines and city gas distribution, there will be a lot of new markets,” he said.
At least half a dozen areas have been identified in the country for setting up LNG terminals, including Okhamadhi by the GVK Group and Pipavav by Mumbai-based Swan Energy Ltd, said a Gujarat state government official close to the development.
While GSPC will import the gas mainly through its proposed terminal at Mundra, where it has joined hands with the Adani Group, Petronet and GAIL will require gas on a long-term basis for its proposed terminals at Dabhol. Petronet, which is setting up an LNG terminal in Kochi, is also looking at expansion in Gujarat.
“This memorandum of understanding (MoU) is a key step in diversifying our LNG supply portfolio and this relation will go a long way in developing mutually beneficial relations between the two companies,” said A.K. Balyan, managing director and chief executive of Petronet.
Earlier this year, Gazprom and GSPC had signed a supply deal.
“Following the successful signing in January this year of a structured deal to supply 0.3 million tonnes a year of LNG for the next two years, GSPC and Gazprom are now exploring the possibility of building further on this mutually beneficial relation. This MoU represents another significant step towards building upon the relation between GSPC and Gazprom,” said Tapan Ray, managing director, GSPC. “We believe securing sufficient long-term LNG supplies is imperative for meeting the growing energy needs of our country.”
The long-term LNG supply agreement is a natural step for all parties after a number of successful LNG cargo deliveries by Gazprom to its counterparties in India since 2007, the company said on Thursday. The company sees India as a key market for LNG, along with Japan and other north Asian countries, as it continues to strengthen its presence and operations in Asia-Pacific.
“We are delighted that our successful partnership with GAIL, GSPC and Petronet has laid the foundations for these strategic LNG supply agreements,” said Frédéric Barnaud, president and managing director, Gazprom Global LNG. “Thanks to our Russian LNG portfolio, we are confident Gazprom will lead the strengthening growth of the LNG markets, in India and across the world.”