GAIL India Monday said it has signed an agreement with Russian firm Gazprom to buy 2.5 million tonnes of gas yearly for 20 years beginning fiscal 2018-19.
The state-run gas utility in a statement said it has signed a "legally binding 20-year liquefied natural gas (LNG) sales and purchase agreement (SPA) with Gazprom Marketing & Trading Singapore (GM&TS), a 100 percent wholly-owned subsidiary of Gazprom Marketing & Trading."
"Under the contract, LNG will be sustainably priced with an oil-indexed formula and delivered to Dahej, Dabhol and Kochi terminals in India," GAIL said.
The gas will come from Gazprom's Shtokman production facilities, which has 130 trillion cubic feet of reserves.
The deal is a key milestone for both GAIL and Gazprom as well as in Indo-Russian energy cooperation.
"This long-term LNG supply agreement with Gazprom, which holds the world's largest gas reserves, is another milestone in Indian-Russian Energy cooperation," said GAIL Chairman B.C. Tripathi.
"The deal with Gazprom reinforces GAIL's commitment to facilitate the development of the Indian market for which $6 billion investments are being made by GAIL in creating natural gas infrastructure."
Vitaly Vasiliev, Gazprom Marketing & Trading chief executive, said: "We recognise GAIL’s strength as the major gas player within India, enabling flexible access to a rapidly developing market and are confident that this SPA will further strengthen our already well-established LNG trading relationship.”