India gets its cheapest gas as Gazprom starts shipments
05 Jun 2018
Russia’s Gazprom has delivered the first gas shipment to India under a long-term contract, making available natural gas at $7 per million British thermal units, the cheapest gas sourced outside the country so far.
At $7 per mmbtu, Russian gas comes $1.5 per mmBtu cheaper than the liquefied natural gas (LNG) supplied by RasGas of Qatar under the 25-year deal, and also $1-1.5 per mmBtu cheaper than the LNG sourced from Australia and the United States.
Petroleum minister Dharmendra Pradhan was at Dahej on Monday to witness the arrival of the first LNG ship under a 20-year import deal with Gazprom.
In January, GAIL India Ltd renegotiated a gas supply contract signed in 2012, after the Russian company failed to deliver from the previously agreed Schtokman project in the Barents Sea.
GAIL also deferred taking deliveries of full 2.5 million tonnes of LNG a year, which prompted an extension of three years to accommodate the supplies not taken in the initial years as well as obtain an additional 2 million tonnes over and above the 50 million tonnes it had agreed to take in 2012 over a 20-year contract period.
Gazprom supplied the 3.4 trillion British thermal unit (TBtu) of cargo from Nigeria. LNG carrier ‘LNG Kano’ delivered the cargo at Petronet LNG Ltd’s import facility in Dahej on Monday morning.
“First we renegotiated price of LNG from Qatar, then reworked Australian supplies and now gas from Russia under renegotiated terms has started to flow,” Pradhan said after receiving the LNG cargo.
India will import LNG worth an estimated $25 billion over the contract period from Russia, he said. “Gazprom price is very competitive.”
He said India also needs to push gas use in order to raise the share of environment-friendly fuel in the energy basket to 15 per cent from current 6.2 per cent.
This would also help the country meet its COP21 commitment to cutting carbon emission.
India depends on imports for meeting 45 per cent of its gas requirements.
India now has a well-diversified hydrocarbon supply basket with LNG coming from the US under a long-term import deal, besides the Russian deal.
Pradhan said Russia has emerged as a long-term source for India’s hydrocarbon imports.
Indian companies have invested over $10 billion in acquiring varying stakes in strategic Russian projects, including Sakhalin-1, Vankorneft and Taas-Yuryakh over the last few years. A Gazprom-led Russian consortium has committed an investment of $13 billion in Esaar Oil in 2016.
Russia is currently the world’s largest crude oil and the second-largest gas producer in the world. India is world’s third-largest energy consumer and fourth largest importer of LNG.
Pradhan said the government is committed to transforming India into a gas-based economy, adding that investments are being made for augmenting natural gas infrastructure, including pipelines, LNG import terminals and City Gas Distribution networks.