Russia’s Gazprom PJSC, the world’s biggest natural gas producer, is stepping up supplies to India. Last week, Alexey Miller, chairman of the Gazprom management committee, and Dharmendra Pradhan, India’s petroleum minister, discussed the modalities for increasing Gazprom’s gas sales in St Petersburg. Pradhan was accompanied by top executives from Petronet LNG, Indian Oil Corporation (IOC) and other public sector firms.
“During the visit to St Petersburg, (we) discussed various routes to bring Russian gas to India and cooperation in third countries. Also, (I) met Alexei Miller, CEO Gazprom, world’s largest gas company. Gazprom is keen to work various gas projects with India,” said petroleum minister Dharmendra Pradhan.
Pradhan also met top executive from Novatek, the second largest gas producing company of Russia, which also express interest to participate in Indian gas sector.
Gazprom, which supplies nearly 30% of Europe’s demand, interest to expand business here comes at a time when its domestic rival Rosneft has offered equity stakes in two Siberian hydrocarbon assets – Vankor and Taas-Yuryakh to Indian firms including ONGC Videsh, Indian Oil Corporation (IOC), Oil India (OIL) and Bharat PetroResources (BPRL).
“The perception of India has changed. Earlier, if any foreign firm wants to do business with India and particularly public sector companies, it used to take atleast two years for the first response. Now, diplomatic push is helping India get energy deals overseas,” a senior petroleum ministry official told FE.
In the past two years, India and Russia have agreed to collaborate for $5.5 billion worth oil and gas projects. New Delhi’s interest in increasing economic co-operation with Kremlin is seen as an extension of several rounds of talks between Prime Minister Narendra Modi and Russian President Vladimir Putin.
Talking about the affordability of natural gas ferried from Russian fields, the petroleum ministry official said that there are options to swap the LNG with other supplies mid-way. “This would make the LNG affordable for Indian market. These technicalities would be discussed between the companies,” the official explained. In the full year of 2015-16, the LNG imports by India witnessed a surge of 14.96% at 21,309.28 mmscm against 18,535.73 mmscm in FY15.
“While Gazprom has been boosting gas exports to its most lucrative market, Europe and Turkey, its dollar-denominated revenue from the region may drop this year to lowest since 2004 as most of contracts linked to oil with a time lag of as much as nine months,” Bloomberg said on April 28. This could led Gazprom to expand its footprint in India, where economy is poised to grow at 8%.
Between 2009 and 2016, Gazprom Group delivered 26 liquefied natural gas (LNG) cargoes to India totaling 1.7 million tonnes. In 2012, Gazprom Marketing & Trading Singapore, which is part of Gazprom Group, and GAIL signed a long-term agreement for LNG. The 20-year agreement provides for LNG supplies in the amount of 2.5 million tonnes per year on a free-on-board basis, with potential for renewal.
Imports of LNG have steadily risen over the years, albeit at varying rates of growth from about 7 bcm in FY06 to about 21 bcm now. Overall gas consumption, has increased, especially FY14 onwards, to compensate for the decline in domestic production.