GAIL renegotiated the terms of the 20-year deal to import 2.5 million tonnes a year of LNG.
New Delhi: India's renegotiated gas import deal with Russia's Gazprom will save between Rs 8,500 crore and Rs 9,500 crore over the contract period ending 2040, Oil Minister Dharmendra Pradhan said on Wednesday.
State-owned gas utility GAIL India Ltd had in January taken advantage of the Russian company's inability to deliver liquefied natural gas (LNG) from the previously agreed Schtokman project in the Barents Sea, to renegotiate price agreed in 2012.
In a written reply in the Rajya Sabha, Pradhan said the first cargo of Russian natural gas under the long-term contract between GAIL India Ltd and Gazprom Marketing & Trading Singapore (GMTS) was received on June 4.
He said: "GAIL and Gazprom successfully re-negotiated the long-term LNG Sale and Purchase Agreement reflecting the current global gas market dynamics. 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."
Without giving specific details, Pradhan said the gas price was negotiated depending on many factors like project location, duration of contract and pricing formula. GAIL renegotiated the terms of the 20-year deal to import 2.5 million tonnes a year of LNG, including price and volume ramp up.
The contracted volume has been lowered from 2.5 million tonnes to 0.5 million tonnes in the first year, 2018-19; 0.75 million tonnes in 2019-20 and 1.5 million tonnes in the third year 2020-21.
The contract period has been extended by three years to accommodate the supplies not taken in initial years as well as getting an additional 2 million tonnes over-and-above the 50 million tonnes it had agreed to take in 2012 over the 20 year contract period.
India has been making the most of its position as one of the world's biggest energy consumers to strike better bargains for its companies. Last year, India got US energy major Exxon Mobil Corp to lower the price of 1.5 million tonnes a year of LNG from Gorgon project in Australia, saving Rs 4,000 crore in import bill.
Pradhan said India currently has four operational LNG import terminals at Dahej and Hazira in Gujarat, Dabhol in Maharashtra and Kochi in Kerala with a total LNG import capacity 27.5 million tonnes per annum.
After regasification, the imported LNG is distributed to industries and domestic consumers through existing pipeline networks, he said.