India gets cheapest gas as Russia begins supplies

India on Monday received its cheapest LNG under a long-term deal as Russia began shipping natural gas at a delivered price of close to $7 per million British thermal unit.

At current oil prices, the Russian rate is $1.5 per mmBtu less than the price at which Qatar, India's oldest supplier, delivered liquefied natural gas (LNG).

Russian supplies are also cheaper by $1-1.5 per mmBtu than the LNG sourced from Australia and the US.

Oil Minister Dharmendra Pradhan, who flew in here to witnessed arrival of first LNG ship under a 20-year import deal with Gazprom, termed the event as “Golden Day” in the India's energy pursuit.

State-owned gas utility GAIL India had in January taken advantage of Russian company's inability to deliver LNG from the previously agreed Schtokman project in the Barents Sea, to renegotiate price agreed in 2012.

GAIL also deferred taking deliveries of full 2.5 million tonnes a year LNG. The contract period was extended by three years to accommodate the supplies not taken in initial years as well as get 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.

LNG carrier ' LNG Kano ', bringing cargo from Russian supplier Gazprom, docked at Petronet LNG’s import facility here this morning.

Gazprom supplied the 3.4 trillion British thermal unit (TBtu) of cargo from Nigeria. "First we renegotiated price of LNG from Qatar, then reworked Australian supplies and now gas from Russia under renegotiated terms has started to flow,” Pradhan said after receiving the LNG cargo.