New Delhi: Petronet LNG has signed a preliminary 25 year deal with Russia’s Gazprom to buy as much as 2.5 million tonnes a year of liquefied natural gas (LNG) to meet surging demand in Asia’s third-largest economy.
Based on market prices of $10 per million British thermal units, the deal could be worth about $1.3 billion a year, or $32.5 billion over 25 years.
“We will now negotiate pricing, volume, supply timings etc. Discussions on these would begin in a month’s time and we want to expedite this and complete the deal as soon as possible,” A. K. Balyan, chief executive at Petronet, told Reuters.
India’s trillion-dollar economy is already the world’s eighth-largest importer of LNG, and those imports could rise as much as five-fold in the next decade as its domestic gas output falls and demand surges.
Petronet currently receives 7.5 million tonnes per year of LNG from Qatar’s Rasgas under a long term deal at its 10 million tonne a year regassification terminal at Dahej in Gujarat.
It also has a deal to buy 1.5 million tonnes of LNG annually from Australia’s Gorgon project from 2014, to be regassified at its 5 million tonnes a year terminal at Kochi.
Kochi terminal is expected to start operations in October-December 2012.
Petronet is also studying the possibility of a third plant in eastern India.
“This MOU (memorandum of understanding) is a key step in diversifying our LNG supply portfolio and this relation will go long way in developing mutually beneficial relation between the two companies,” Balyan said in the statement.