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India received on Monday its first liquefied natural gas (LNG) cargo from Russia under a long-term supply contract with Gazprom, in a move that Indian Oil Minister Dharmendra Pradhan described as a “historic milestone in India-Russia energy ties” that would diversify India’s energy sources.
GAIL (India) Limited is the first Indian public-sector company to source LNG from Russia on a long-term contract basis, the Indian company said, adding that it has a deal to import LNG from Gazprom Marketing & Trading Singapore (GMTS).
This is GAIL’s third long-term supply contract for this year, and the LNG sourced will be used to develop the natural gas market in India and increase the contribution of natural gas to 15 percent of India’s energy mix, India’s minister Pradhan said.
GAIL (India), the state-held company that received Gazprom’s LNG cargo, also has a 20-year Sale and Purchase Agreement with U.S. Cheniere Energy and a 20-year take-or-pay contract with the Dominion Energy Cove Point (DECP) terminal in Cove Point, Maryland, which entered commercial service in April.
So far, India has imported LNG from Qatar, Australia, and the United States, and it is now adding Russian LNG supply as it aims to become a “gas-based economy.”
Two years ago, Qatar was India’s only LNG supplier.
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“LNG imports from Russia will go a long way in mitigating the risks arising out of geo-political disruptions. I am hopeful the new arrangement will usher in price stability & energy security for India and also lead our transformation towards a gas based economy,” minister Pradhan said today.
As part of its plan to use more gas in its energy mix, India looks to boost its LNG import capacity more than three times to 70 million tons annually. The government plans to build 11 new LNG import terminals, on top of the four operating terminals, over the next seven years—and more afterwards.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.