Gazprom in long-term LNG deal with India's Petronet-UPDATE 3, 俄罗斯天然气工业股份公司
Release Date: 2011-06-02
NEW DELHI, June 1 (Reuters) - Gazprom will deliver up to 2.5 million tonnes of liquefied natural gas (LNG) a year to India under a deal signed with Petronet LNG on Wednesday that could be worth more than $32 billion.
The 25-year memorandum of understanding (MOU) underscores Indian efforts to secure power for its fast-growing economy, already Asia's third largest.
Overseas deals are also being sought to help cushion against global price fluctuations and to secure energy supply for a country that relies on imports for two-thirds of its oil.
Petronet and Gazprom Marketing & Trading, a unit of Gazprom announced they had signed a preliminary deal for up to 25 years.
Based on market prices of $10 per million British thermal units, it could be worth about $1.3 billion a year, or $32.5 billion in total.
"We will now negotiate pricing, volume, supply timings etc. Discussions on these would begin in a month's time and we want to expedite this and complete the deal as soon as possible," Petronet CEO A. K. Balyan told Reuters.
Petronet shares hit a lifetime high of 144.50 rupees, jumping nearly 5 percent on the news. They closed up 4.2 percent in a Mumbai market which gained 0.6 percent.
With an economy growing by around eight percent a year and gas seen as an attractive option versus carbon-heavy coal and oil, India's demand could double by 2020, making it a promising market for Gazprom which already sells to an Indian state firm.
SHTOKMAN SUPPLY
A source at Gazprom said that supplies could be from its trading portfolio and then from the giant Shtokman project.
"Since it will be a long-term deal, trading volumes will be very small and the majority of the supplies will be from Gazprom's equity portfolio like Shtokman and Yamal, from where supplies will begin after a few years," said Praveen Kumar, senior consultant at FACTS Global Energy in Singapore.
The Shtokman Barents Sea gas deposit is not expected to start LNG production before 2017 which means Gazprom's marketing arm will have to buy or swap up to 2.5 million tonnes of LNG from the market until then.
Petronet has submitted a bid with ONGC and GAIL (India) for a minority stake in Russia's Yamal LNG project, which is set to start production of up to 16 million tonnes of frozen gas a year in 2015-17.
COMING ON STREAM
European traders said the agreement with Gazprom would have little impact on supplies as many more projects come on stream globally.
"They (Russia) have the volume to deliver without cutting European Union (EU) supply and there are a lot of new gas supply opportunities coming to markets," a gas trader with a major European utility said.
Qatar, the biggest exporter of LNG, boosted capacity last year and Australia is expanding rapidly, although some analysts say rising demand from Japan could crimp availability.
India needs gas to help power its electricity generation, fertiliser sector, city gas distribution and for industries.
Problems at the D6 block off India's east coast operated by Reliance have curtailed output while state-run Oil and Natural Gas Corp (ONGC) is struggling to arrest declining production from its ageing field.
"Local output is declining without any additional indigenous supplies coming online in the near future," Kumar said.
India is already the world's eighth-largest importer of LNG and the widening gap between demand and supply could mean imports rise as much as five-fold in the next decade.
Petronet, partly owned by GAIL, Indian Oil Corp (IOC) and refiner BPCL, currently receives 7.5 million tonnes of LNG per year from Qatar's Rasgas at its 10-million-tonne-a-year Dahej regassification terminal in western Gujarat state.
It also has a deal to buy 1.5 million tonnes of LNG annually from Australia's Gorgon project from 2014, to be regassified at Kochi in southern India.
The plant at Kochi terminal should be operating in by December 2012. Petronet is also studying the possibility of a third plant in eastern India.
| Type: | NORMAL |
| Company: | 俄罗斯天然气工业股份公司 |
| Country: | 俄罗斯 |
| Url: | http://www.forexyard.com/en/news/Gazprom-in-long-term-LNG-deal-with-Indias-Petronet-2011-06-01T160848Z-UPDATE-3 |