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 U.S.
Oil Minister Dharmendra Pradhan, who flew in to Dahej 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.
Mr. Pradhan said, India is pushing towards a gas-based economy by raising the share of environment friendly fuel in the energy basket to 15 per cent from current 6.2 per cent.
There exists huge scope for gas usage in Indian economy from generating power to producing quality steel, he said, adding that increasing gas share would also help the country meet its COP21 commitment to cutting carbon emission.
India is dependent on imports to meet 45% of its gas needs. Beginning of supplies from Russia comes within weeks of India importing its first ever LNG cargo from U.S. under a long-term import deal.
Mr. Pradhan said the starting of LNG imports from Russia has added a new dimension to the Indo-Russian bilateral relations, particularly in the oil & gas sector. Russia has emerged as a long-term source for India’s hydrocarbon imports, he said.
Stating that the government is committed to transforming India into a gas-based economy, he said investments are being made for augmenting natural gas infrastructure, including pipelines, LNG import terminals and City Gas Distribution networks.
The deal was renegotiated in January this year. Gazprom will supply LNG from Yamal LNG project in the Arctic peninsula.
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 U.S. energy major Exxon Mobil Corp. to lower price of 1.5 MT a year of LNG from Gorgon project in Australia, saving ₹ 4,000 crore in import bill.