GAIL to renegotiate LNG deal with Gazprom

State-owned Gas Authority of India Limited (GAIL) is seeking to renegotiate a contract with Gazprom for supply of liquefied natural gas (LNG) and defer most of the supplies.  A subsidiary of the Russian gas holding Gazprom Marketing and Trading, Singapore signed a legally binding 20-year contract for the sale of LNG with GAIL at the beginning of October 2012.  The agreement states that GAIL will get 2.5 million tons of LNG per year (equivalent to 3.5 billion cubic metres per year) for 20 years. According to a report, at current prices set by “Gazprom”, LNG will cost GAIL $7 per million British thermal units, while LNG is worth $5 in the spot market. According to the source, this is a big difference for such a price sensitive market as India.