Putin: Gazprom - GAIL contract provides window to start LNG supplies in 2017-2021
MOSCOW. Dec 10 (Interfax) - Gazprom Marketing and Trading's (GM&T) contract to supply 2.5 million tonnes of LNG to India's GAIL provides for a window for starting shipments, Russian President Vladimir Putin told Indian news agency PTI.
"A long-term agreement on LNG supplies signed between the Gazprom Group and India's GAIL in 2012 entered into force in June 2014: it provides for the delivery of 2.5 million tons a year for the period of 20 years. India will start receiving LNG shipments as early as in 2017, or, in case the deadlines are shifted, by all means no later than in 2021," Putin said
It was reported earlier that this gas might come from the Yamal LNG plant, the first phase of which is expected to be launched at the end of 2017. In May GM&T reached an agreement to buy up to 3 million tonnes of LNG annually from Yamal LNG. Usually in world practice the contract window can narrow as the plant launch approaches.
"The LNG will be delivered on free-on-board terms at the transshipment point in Western Europe for further shipment to markets in the Asia-Pacific region, primarily India," Gazprom said in a press release upon signing the contract with Yamal LNG. The price will be set according to a formula with oil indexation. Gazprom's contract with GAIL is linked to the JCC index (Japanese crude cocktail).
Putin also said in his interview that GM&T already delivered two shipments of LNG totaling 0.11 million tonnes to India in 2013.
The president was skeptical about the prospects of building a gas pipeline from Russia to India. "As far as Russia's natural gas supplies to India are concerned, that issue needs thorough consideration. A preliminary analysis has shown that the cost of pipeline transportation may significantly exceed that of liquefied natural gas supplies. So this is largely the question of commercial feasibility. For the time being, Russian liquefied natural gas transportation seems the best choice," Putin said.
India is the fourth largest importer of LNG, importing about 18 billion cubic meters of gas (about 13 million tonnes of LNG) annually. The country's largest supplier of gas is Qatar, which supplied 15.3 bcm (about 11 million tonnes) in 2013. India currently has four LNG terminals with combined capacity for 23 million tonnes per year.