At $7 per million British thermal unit, India made the cheapest deal with Russia for purchasing LNG, which will save India Rs 9,500 crore. On June 4, the first-ever cargo of LNG from Russian supplier Gazprom arrived at Dahej in Gujarat. Oil Minister Dharmendra Pradhan in a written reply to Rajya Sabha said that India’s Gail and Russia’s Gazprom successfully re-negotiated 20-year-long LNG Sale and Purchase Agreement, which will save between Rs 8,500 crore and Rs 9,500 crore.
The contract period of the deal will end in 2040. India pushed for a cheaper gas import in a bid to make the country a gas-based country amid the concerns over fuel-triggered pollution and volatility in international oil prices. GAIL re-negotiated with Gazprom the terms of the deal to import 2.5 million tonnes a year of LNG, which also led to an extension of the deal by three years.
“The renegotiated price, compared to earlier contract price, will result in saving of approximately Rs 8,500 crore (crude oil at USD 50 per barrel) or Rs 9,000 crore (crude oil at USD 60 per barrel) or Rs 9,500 crore (crude oil at USD 70 per barrel) for the years 2018 to 2040,” Dharmendra Pradhan said in a written reply.
GAIL will purchase an additional six million tonnes of LNG volumes from Gazprom under the re-worked deal. Dharmendra Pradhan had earlier said that the Narendra Modi government is looking to diversify the import market, which is currently dominated by coal and oil.