India's state-owned natural gas utility, Gail (India) Ltd., said it has renegotiated its 20-year contract to purchase liquefied natural gas (LNG) from Russia's Gazprom, with deliveries expected to begin in the second quarter.
Gail and Gazprom first signed a sale and purchase agreement (SPA) for up to 2.5 million metric tons/year of LNG in 2012. On Tuesday, Gail said the two sides had agreed to an amendment that would make "an adjustment to the price and volume of LNG supply, thus enabling Gail to develop incremental gas markets to offtake these volumes, thereby mitigating volume risk." Specific terms of the agreement were not disclosed.
"This deal is a step for Gail to diversify [its] LNG portfolio by spreading price reference indices across multiple geographies so as to provide consumers greater flexibility in service," the company said. "This chapter of [the] relationship between the two companies opens up exploration of further opportunities in portfolio optimization and LNG swap dealings for mutually beneficial outcomes."
The SPA signing in 2012 followed a basic framework agreement reached in 2011 between the two companies.
Last month, India's minister for oil and natural gas said Gail has beentrying to renegotiate separate LNG import contracts with Cheniere Energy Inc. and Dominion, with the most recent discussions occurring last November. Dominion, which plans to export LNG to Gail through its Cove Point terminal in Maryland, called the minister's claims a mischaracterization.
"With start of the LNG supplies from [the] USA and Gazprom in 2018, Gail's LNG portfolio would increase multi-fold, bringing it in the league of some of the largest traders of LNG in the world," Gail said.
According to a report last week by Bloomberg, LNG exports from Cove Point will be delayed until March. Dominion spokesman Karl Neddenien told NGI earlier this month the company still expects Cove Point "to be declared commercial early this year, as we said last month."