Gazprom to supply LNG to India
Gazprom has agreed to supply liquefied natural gas to three Indian energy companies.
Gazprom Global LNG (GGLNG) has signed a memorandum to supply up to 7.5m tonnes, or 10bn cubic metres, of LNG over 25 years to Gail, Gujarat State Petroleum Company and Petronet, the Russian company said on Thursday.
“Thanks to our Russian LNG portfolio, we are confident GGLNG will lead the strengthening growth of the LNG markets in India and across the world,” said Frederic Barnaud, president of GGLNG.
The deal is part of a Gazprom's efforts aimed at reducing its dependence on European energy markets. Gazprom sees India as one of its targets as it seeks to boost its role as a global LNG supplier and reduce dependence on saturated European energy markets that absorb the bulk of its gas exports.
Valery Nesterov, oil analyst at Troika Dialog, said the deals to supply gas to India would be “a serious help to stimulate Russian LNG projects” that face strong competition from producers located closer to gas markets.
India’s pledge to import Russian LNG could persuade Moscow to approve the tax breaks for Shtokman that foreign partners in the project claim are essential for its health, he said.
Frank Harris, head of LNG research at Wood Mackenzie, said Russian LNG projects would struggle to find markets amid competition from lower cost suppliers in the Middle East, Asia and Australia that are located closer to gas markets. “Russia has two big LNG targets going on at the same time. It could be a stretch to make one of them work,” he said.
Earlier this week, a consortium comprising ONGC, Petronet and Gail, said it was in talks for a stake in Yamal LNG, the Siberian liquefied natural gas project led by Novatek.
The Yamal LNG project is forecasting here production of up to 15m tonnes a year of LNG commencing in 2016. Earlier this year Novatek, Russia’s biggest independent gas producer, said it would sell Total a 20 per cent interest in the project.
Source: Gazprom Marketing and Trading Communications