LNG Current Affairs - 2020

India Russia sign first ever Term Contract to import crude oil to India

On February 5, 2020, the Minister of Petroleum and Natural Gas Shri Dharmendra Pradhan and the Chairman of Rosneft (Russia’s largest oil producing company) signed the first ever term contract. According to the contract India will import 2 million metric tonnes of Urals grade crude oil.

Highlights

The agreement was signed between IOCL and Rosneft. The companies discussed on energy cooperation and hydrocarbon enhancement.

Rosneft is the largest oil producing company in Russia. The company is extended over 20 countries in the world. The company is to bid in the disinvestment of BPCL (Bharat Petroleum Corporation Limited). On November 20, 2019, the Union cabinet approved to privatize BPCL selling 52.98% of its stakes to private sector.

India and Russia Oil Ties

After the crude oil agreement, India and Russia are also looking for ways to sign agreements to bring LNG (Liquefied Natural Gas) supplies from Russia. Russia is estimated to posses 10 to 14 billion tonnes of oil and 15 trillion cubic metres of gas. The rich resources of Russia extends till Serbia in Pacific Ocean in the far East region.

India receives first shipment of cheapest LNG from Gazprom Russia

On June 4, 2018, India received first shipment of its so far cheapest Liquefied Natural Gas (LNG) from Russian supplier Gazprom. The LNG has been delivered at a price close to USD 7 per million British Thermal Unit (mmBtu). This price is around 1.5 USD cheaper from the LNG imported from Qatar, which is India’s oldest and largest supplier of LNG. This price is also 1-1.5 USD per mmBtu cheaper than the LNG sourced from Australia and United States.

India’s Natural Gas Production and Import

According to official data, India’s total natural gas production in 2017-18 was 32.64 billion cubic meter of which 22.01 BCM is offshore production while 10.63% is onshore production. The natural gas production in India has fallen in recent years as shown in below graphics:

However, at present, close to half of Natural Gas demand is fulfilled by imports. India’s natural gas import dependence in 2016-17 was close to 45%. At present, India is fourth largest importer of LNG.

Natural Gas is one of the key inputs for generation of power and manufacturing products in fertilizer and steel industries. The current government policy also pushes 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.

India’s Gas Deals

At present, Qatar is biggest supplier of Natural Gas to India. The recent shipment from Russia has come under a 20 year deal between India’s State-owned gas company GAIL India Ltd and Russian supplier Gazprom. A few weeks before India had also imported its first ever LNG cargo from US under a long-term import deal. The government policy is to expand the LNG import basket to meet any contingency due to geopolitical or economic reasons.