(EnergyAsia, October 3 2012, Wednesday) — Gazprom Marketing and Trading (GM&T), the fully-owned subsidiary of the Russian gas giant, has signed an agreement for the annual supply of 2.5 million tonnes of liquefied natural gas (LNG) to India’s GAIL for 20 years, the companies announced.
The deal follows through on the Basic Framework Agreement (BFA) signed by the two companies on May 18 2011.
GM&T will supply the LNG from its global trading portfolio and its parent’s production facilities at an oil-indexed pricing formula for delivery to the Indian import terminals at the ports of Dahej, Dabhol and Kochi.
Gazprom said the agreement affirms its goal to develop India as a core market for its LNG business and the development of a bilateral trade relationship between the two countries.
Vitaly Vasiliev, CEO of Gazprom Marketing & Trading, said: “We are delighted to have signed this agreement with GAIL during a period of rising demand for LNG in India. We are looking forward to working together with GAIL to help meet India’s expanding gas demand whilst securing a long-term market for Russian gas.
“We recognise GAIL’s strength as the major gas player within India, enabling flexible access to a rapidly developing market and are confident that this agreement will further strengthen our already well-established LNG trading relationship.”
B. C. Tripathi, chairman and managing director of GAIL (India) Limited, said the deal with Gazprom, which holds the world’s largest gas reserves, aligns with his company’s plan to invest US$6 billion to develop its natural gas infrastructure while strengthening energy co-operation between Russia and India.
“The deal also marks our efforts to create a well-diversified and secured supply portfolio to meet the ever growing energy requirements of the Indian economy and enable sustainable long-term growth for GAIL,” he said.
Gazprom, which owns and operates Russia’s only LNG plant on Sakhalin Island, is planning to add a second plant on the nearby the port of Vladivostok, thus doubling its export capacity to 20 million tonnes a year.