Bloomberg News

Gazprom Seeks LNG Sales to India Under Long-Term Agreements

June 02, 2011

(Updates with detail from fourth paragraph.)

June 2 (Bloomberg) -- OAO Gazprom’s marketing & trading unit seeks to increase supplies of liquefied natural gas to India via long-term contracts as the Russian gas exporter plans to build LNG capacity to expand in new markets.

Gazprom Marketing & Trading Singapore signed preliminary agreements to sell as much as 7.5 million metric tons a year of LNG to Petronet LNG Ltd., Gail India Ltd. and Gujarat State Petroleum Corp., the unit said today in an e-mailed statement.

Sales agreements may be signed within about six months, a person familiar with the talks said. The companies are still discussing prices, the person said, declining to be identified before a decision is reached.

Indian companies are seeking energy assets and supplies across the world to meet demand from fertilizer and power producers in the world’s fastest-growing major economy after China. Gazprom, the world’s biggest gas producer, wants access to consumers beyond the reach of its pipelines, with supplies of the fuel cooled to liquid for transit by tanker.

Gazprom Marketing & Trading will use its current global supply for the Indian buyers, as well as the Russian producer’s existing and future output, the unit said. Gazprom has delivered LNG cargoes to India under spot deals since 2007.

The trading unit is seeking accords with buyers in Europe, North America and the Asia-Pacific region, the person said.

Shtokman LNG

Shipments may begin in 2016 to 2018, with Gazprom M&T first supplying fuel bought in the market, the official said, adding that the unit expects to sell LNG from the Gazprom-led Shtokman project in the Barents Sea and possibly from expanded capacity at Sakhalin-2 venture.

Petronet and Gail India may each buy up to 2.5 million tons annually for as long as 25 years, according to statements from the unit. The long-term supply accord with Gujarat State Petroleum didn’t specify a timeframe. The official said agreements may range from 15 to 25 years.

Shtokman, Gazprom’s Arctic offshore project with Statoil ASA and Total SA, is scheduled to make a final investment decision at the end of the year. The venture aims to begin LNG production in 2017, with capacity at 7.5 million tons in the first phase.

Sakhalin-2, where Gazprom’s partners are Royal Dutch Shell Plc, Mitsui & Co. and Mitsubishi Corp., is operating beyond its designed 9.6 million-ton-a-year capacity and has fully contracted the LNG.

--Editors: Torrey Clark, Alex Devine

To contact the reporter on this story: Anna Shiryaevskaya in Moscow at ashiryaevska@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net


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