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MAY 23 2017

GAIL-Gazprom deal still on negotiating table

  • Economic Times, ET Bureau / Hyderabad
  • Created: Tue 23rd MAY 2017

 

The deal to source natural gas from Russia’s Gazprom is still on the negotiating table, according to officials aware of negotiations between India and Russia.

However, contentions remain with regard to the tenure of the deal and the price at which gas is being sourced, an Indian government official said, adding that: “We expect natural gas from the deal to reach India by 2019.”

Under the original deal, forged in 2012, Gazprom's subsidiary Gazprom Marketing and Trading Singapore and India’s public sector undertaking GAIL had signed a 20-year supply contract. The initial commitment was to supply 2.5 million tonnes (mt) of liquefied natural gas (LNG) annually to India. The supplies were to begin in 2018. In an April 12 interview to RIA Novosti, Russia’s state-operated domestic Russian-language news agency, Yuri Sentyurin, Russia’s Deputy Minister of Energy, said the deliveries to India are to begin in 2018.

The Indian side is batting for a longer term contract and is trying to capitalise on the low natural gas price, hoping to renegotiate the price and time of LNG supply. “It’s a buyers market right now,” said a GAIL official aware of the discussions.

The Russian side is looking for a short-term contract, pinning hopes on natural gas prices to rise. The higher prices will come to their aid when the opportunities to extend the contracts arise.

Since Gazprom cancelled the Shtokman terminal on the South Barents Basin, GAIL has been looking to renegotiate the contract due to the change in the LNG source terminal specified in the contract.

 

Tags

Gas Natural Gas Energy Russia Gazprom Liquefied natural gas Trading India

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