--GAIL says it will buy 2.5 million tons of LNG annually from
Gazprom
--Delivery of supplies to start from 2018-19, GAIL says
--Most of supply to come from Shtokman field in Arctic Russia,
it says
--LNG to be priced using oil-index formula
(Adds details throughout, background on India's energy needs,
Shtokman project)
By Rakesh Sharma
NEW DELHI--India's state-run GAIL (India) Ltd. (532155.BY) said
Monday that it has signed a 20-year deal to buy liquefied natural
gas from the Singapore unit of Russia's state-owned gas giant
Gazprom OAO (GAZP.RS).
The deal will help India meet its growing demand for energy and
the government's target of doubling the share of natural gas in the
nation's energy mix to 20% by 2025. India has struggled with an
energy shortage that has limited its economic growth in recent
years.
The GAIL-Gazprom deal may also help revive development of the
long-delayed Shtokman natural gas field in Arctic Russia, which
Gazprom postponed indefinitely in August.
GAIL, a gas-pipeline operator, said in a statement that it would
buy 2.5 million metric tons of LNG annually from Gazprom starting
in 2018-19, with most of the supply coming from Shtokman.
The LNG will be priced according to an oil-indexed formula and
delivered to India's Dahej, Dabhol and Kochi terminals, it
said.
Launched in the 1990s, the Shtokman project has been repeatedly
delayed due to disagreements among the partners as well as high
production costs and low prices for natural gas following a
decade-long production boom in the U.S., which was originally
conceived as an export market for Shtokman gas.
Gazprom said in August that it had decided to postpone
development of Shtokman indefinitely, but Total responded by saying
the partners were still discussing the field's viability.
Gazprom holds a 51% stake in the field. Norway's Statoil ASA
(STL.OS) owns 24% and French oil major Total SA (TOT) the remaining
25%.
Statoil has completely written off its stake in the project,
representing EUR286 million, but also said it remained in
discussions with Gazprom.
GAIL's statement said the Shtokman supply would be "optimized
and supplemented" by Gazprom's additional resources.
India's natural gas importers are fast sealing deals to secure
supplies as demand far exceeds domestic output. The nation
currently produces about three-quarters of its natural gas
requirements, but will need to import nearly half of its
requirements within a few years due to dwindling production.
GAIL owns and operates more than 9,500 kilometers of
cross-country natural gas pipelines.
Write to Rakesh Sharma at rakesh.sharma@dowjones.com