State-run Gail (India) Ltd has renegotiated the clauses of a long-term liquefied natural gas (LNG) purchase deal with Russia’s Gazprom, through which the global major has now agreed to an adjustment to the price and volume of gas supply. The supply of fuel by Gazprom is expected to start after April this year.
This is likely to help India bring imported LNG at an affordable price. In a statement on Tuesday, GAIL said that an amendment to the contract was signed between the two companies on Tuesday. A long-term sale and purchase agreement building up to 2.5 million tonne per annum of LNG was signed by GAIL with Gazprom Marketing and Trading Singapore (GMTS) in the year 2012.
B C Tripathi, chairman and managing director of GAIL, said, “This agreement is a key milestone affirming partnership of GAIL and Gazprom in developing LNG markets under Indo-Russia trade relationship.” This is also considered as a move by GAIL to diversify LNG portfolio by spreading price reference indices across multiple geographies so as to provide consumers greater flexibility in service.
“This chapter of relationship between the two companies opens up exploration of further opportunities in portfolio optimisation and LNG swap dealings for mutually beneficial outcomes,” the company said in a statement.
The deal signed in 2012 is a 20-year LNG sales and purchase agreement following the signing of an earlier basic framework agreement (BFA) by the two companies in May 2011.
With start of the LNG supplies from the US and Gazprom in 2018, GAIL’s LNG portfolio would increase multi-fold bringing it in the league of some of the largest traders of LNG in the world.