4 Jun 2018 14:16

India receiving first Russian LNG under long-term contract, 0.5 mln tonnes to arrive in 2018

MOSCOW. June 4 (Interfax) - India is importing its first tanker of Russian liquefied natural gas (LNG) under a long-term contract, India's GAIL state gas utility, which is due to receive the Gazprom tanker, said on Twitter.

The tanker is arriving at the Petronet company's Dahej LNG terminal, where a press conference by India's Minister of Petroleum and Natural Gas Pradhan Dharmendra is being held.

At the start of the year, GAIL and Gazprom renegotiated the long-term contract and made changes to price and shipping volume. Gazprom buys gas from Yamal LNG, the first stage of which became operational at the end of December 2017, with deliveries under long-term contracts starting in Q2 2018.

In negotiations with Gazprom, contracted volume was reduced from 2.5 million tonnes of LNG per year to 0.5 million tonnes in 2018-2019, to 0.75 million tonnes in 2019-2020 and to 1.5 million tonnes in 2021, India's Economic Times newspaper reported citing GAIL CEO Shri Tripathi.

GAIL has committed to importing the full volume of 2.5 million tonnes by the fourth year and will make up for initial reduction in volume over the remaining length of the contract.

Price indexation has been changed from Japan Customs-cleared Crude to Brent, with the oil-linked slope of the contract formula lowered, leading also to a reduction in the final price.

The renegotiated contract provides for diverting a part of the volume, originally contracted on a delivered ex-ship basis, to other markets, Economic Times sources said.

The term of the 20-year contract has been extended a further three years, with the Indian company agreeing to purchase an additional 6 million tonnes of LNG, the sources said. The pricing has been changed from 9-month linkage to Japanese Customs cleared crude to three month averages of Brent, they said.