US sanctions-hit Russian energy giant in talks for LNG terminal at Kakinada port
Gazprom, a Russian state-owned energy firm under US sanctions, is in talks to invest $600 million to build an LNG terminal at Kakinada port. But will this hurt already souring India-US ties?
New Delhi: Gazprom, a Russian state-owned energy giant under US sanctions, is in talks to build a 5 million tonne LNG regasification terminal at Kakinada port on India’s east coast, as part of plans to invest in Indian ports and gas infrastructure.
Executives of Kakinada Seaports Ltd, Gazprom, and representatives of the Russian Federation embassy in New Delhi are expected to meet this week to discuss the modalities of the proposed $600 million investment, four people said.
“Gazprom is looking to invest in port and LNG assets in India. Currently, it is in talks to set up an LNG terminal at Kakinada port," one of them said.
“There is global interest in India’s maritime space. Among them, Russian entities including Gazprom have been actively scouting for maritime and port assets in India," added an Indian government official aware of Gazprom’s talks with Kakinada Seaports. All four people spoke on condition of anonymity.
Gazprom’s plan to acquire port infrastructure in India comes in the backdrop of Indian port operators including Adani Group barring vessels sanctioned by the US, the UK, and the European Union from their ports. The sanctions are related to Russia’s war with Ukraine.
Gazprom’s India plans may not have a major impact on India-US relations as New Delhi appears keen on big investments from Russia, said Sankalp Gurjar, assistant professor of geopolitics and geoeconomics at Gokhale Institute of Politics and Economics. He pointed out that India has revived other partnerships with Russia recently, including defence acquisition plans.
India-US relations, meanwhile, are strained over Washington’s steep tariffs on Indian goods, including an additional 25% penalty for sourcing oil from Russia, even as New Delhi is looking to strike a landmark trade deal.
“India has made it clear to the US that it would not budge to diktats. In this scenario, new business tie-ups and investments can be expected by Russian companies in India," Gurjar said.
Another legal expert said the US sanctions would not have an impact on Gazprom’s plans for India or pose legal hurdles for the company’s Indian partners.
“From an Indian law standpoint, there should be no explicit legal issue in the case of a likely investment by Gazprom," said Vaibhav Kakkar, a senior partner for cross-border transactions, regulatory and corporate laws, including securities, foreign exchange, at Saraf and Partners, a law firm.
“However, the proposed investment can face practical issues in terms of implementation and operations of the company as financiers having an exposure in the US and Europe, and other global service providers, may resist from dealing with them [Gazprom] given the sanctions imposed by the US," Kakkar added.
- Russia’s Gazprom, which faces US sanctions, is in talks to invest $600 million to build a 5 million tonne LNG regasification terminal at Kakinada port, signaling an expansion into India’s east coast energy and port infrastructure.
- According to legal experts, Gazprom’s proposed LNG terminal in India is unlikely to significantly strain India-US relations, as New Delhi continues to welcome Russian investments even as it seeks to balance trade negotiations with Washington.
- A Gazprom LNG terminal on India’s east coast would also be geographically significant, as it would support the Chennai-Vladivostok Maritime Corridor and could facilitate future utilization of gas discovered off the Andaman Islands.
Safe investment destination
Although most of India’s energy imports land on its western coast, India and Russia have been working to improve trade through the eastern coast via the Chennai-Vladivostok Maritime Corridor.
Trade through this corridor improved after India and Russia in 2019 signed a memorandum of understanding to enhance maritime connectivity between Chennai and Vladivostok, a major port city in Russia.
Gazprom’s plan to expand in India also coincides with LNG investments returning to the US as Donald Trump, the country’s president, focuses on fossil fuels. In the first nine months of 2025, the US dominated global investments into LNG terminals, accounting for about 90% of sanctioned capacity.
However, for Russian state-owned firms, India offers a safe market, said experts.
“If Gazprom is looking at investment in an LNG terminal in the country, it may be because India seems to be a safer investment destination for them compared to other countries as India has been resistant to global pressures in terms of energy procurement," said Prashant Vasisht, senior vice president and co-group head, corporate ratings, Icra Ltd.
“Also, the gas discovered in Andaman would need to be transported to the east coast of India for its utilization and a new terminal in Kakinada would add to the options," he added.
Currently, two LNG terminals are proposed to be developed at Kakinada port. While Norway-headquartered Crown LNG has signed up to develop one terminal, Kakinada Seaports holds the rights for the second terminal.
Kakinada Seaports’s chairman and managing director K.V. Rao declined to comment on Gazprom’s proposal to develop an LNG terminal at Kakinada port. The Russian Federation embassy in New Delhi did not respond to queries mailed on 3 October.
Queries emailed to Gazprom and Kakinada Seaports on 1 October, and to Jayadev Polavarapu, managing director of Kakinada Infrastructure Holdings Pvt. Ltd, on 3 October remained unanswered.
India’s LNG demand
Russia is not a major source of LNG although it is the top supplier of crude oil to India. In FY25, Russia didn’t supply any LNG to India, and in FY24, it supplied only about $75 million worth of natural gas.
The top suppliers of LNG to India—the world’s fourth-largest importer of natural gas—are Qatar, the US, and the UAE, which supplied LNG worth $6.39 billion, $2.46 billion, and $2.04 billion, respectively, in 2024-25.
Gazprom had signed a contract with GAIL (India) Ltd in 2012 to supply 2.85 million tonnes of LNG for 20 years. However, in 2022, the Russian gas producer stalled supplies to GAIL as spot sales fetched it better returns. Supplies resumed in May 2023.
In 2019, Rosneft became the first Russian state-owned energy giant to invest in India’s energy space when it acquired a 49.13% stake in Essar Oil India from Essar Energy Holdings Ltd and its affiliates, and in 2018 rebranded it as Nayara Energy.
The Union government aims to increase the share of natural gas in India’s energy mix to 15% by 2030 from about 8% now. But, according to the International Energy Agency (IEA), India’s demand for natural gas is expected to decline by 1% in 2025, after expanding at 10% in 2024.
IEA, however, expects the trend to reverse in 2026 with a 7% growth, driven by the ongoing expansion of India’s city gas distribution and CNG (compressed natural gas) filling station networks, expanding industrial gas use, and rising electricity needs.
Expanding LNG capacity
Currently, India has seven operational LNG regasification terminals, with a total 47.7 million tonne capacity. But the overall utilization level of these seven terminals is about 50.5%, according to energy industry experts.
In 2024-25, India imported 10,194 million tonnes of LNG, valued at $15.2 billion.
A regasification terminal converts LNG to gas before passing it on to customers.
“The capacity utilization of [the LNG] terminals is expected to increase with the complete integration of the pipelines and adding geographical areas (GAs) with city gas distribution," said Icra’s Vasisht. “Currently, 91 GAs are yet to be connected to the gas network. Several companies including state-run majors are setting up more terminals."
GAIL plans to increase the capacity of its LNG terminal at Dabhol in Maharashtra to 12.5 million tonnes by 2031-32 from 5 million tonnes now. Petronet LNG Ltd—a joint venture of GAIL, Indian Oil Corp., Bharat Petroleum Corp., and ONGC Ltd—plans to develop the Gopalpur terminal in Odisha and expand its 17.5-million tonne LNG terminal at Dahej in Gujarat.
topics
