GAIL had in 2012 signed a 20-year deal to import 2.5 million tonnes per annum of LNG from now-cancelled Shtokman LNG in the Barents Sea. Gas under this contract was indexed to the average price of customs-cleared crude oil imports by Japan, called Japan Customs-cleared Crude or JCC. Deliveries were to start from the second quarter of 2018.
Sources said the benchmark has been changed to Brent crude oil with lower indexation.
Exact price changes were not immediately known.
Also, deliveries have been staggered. GAIL will begin with 0.5 million tonnes (MT) buy in the first year, which will be ramped up to 0.75 MT in the following year and then to 1.5 MT in the year thereafter.
Entire 2.5 MT would start flowing only in year four or five, sources said, adding that the quantities not taken initially would be bought during the remaining period of the contract.
Gazprom will supply LNG from Yamal LNG project in the Arctic peninsula, they said, adding that supplies have been delayed due to weak demand at home.
The intervening period would be used to find customers for the Russian gas.
Last year, India got US energy major Exxon Mobil Corp to lower price of LNG from Gorgon project in Australia, saving Rs 4,000 crore in import bill.
In late 2015, it had renegotiated price of the long-term deal to import 7.5 million tonnes per year of LNG from Qatar, helping save Rs 8,000 crore.
In a press statement, GAIL said it has "successfully renegotiating the long-term LNG Sale and Purchase Agreement (SPA) originally signed in the year 2012".
Without giving details of the changes, it said an amendment to the contract was signed today.
A long-term LNG Sale and Purchase Agreement building up to 2.5 million tonnes per annum of LNG on DES (Discharge-ex- Ship) basis were executed by GAIL with Gazprom Marketing & Trading Singapore (GMTS) in the year 2012, the supplies under which are scheduled to start in Q2 2018.
"The two parties have agreed to an adjustment to the price and volume of LNG supply thus enabling GAIL to develop incremental gas markets to offtake these volumes thereby mitigating volume risk," it said.
The deal, the statement said, is a step for GAIL to diversify LNG portfolio by spreading price reference indices across multiple geographies so as to provide consumers greater flexibility in service.
"This chapter of the relationship between the two companies opens up exploration of further opportunities in portfolio optimisation and LNG swap dealings for mutually beneficial outcomes," it said.
The SPA signed in 2012 is a 20-year LNG sale and purchase agreement following the signing of an earlier Basic Framework Agreement (BFA) by the two companies on 18 May 2011. With start of the LNG supplies from USA and Gazprom in 2018, GAIL's LNG portfolio would increase multi-fold bringing it in the league of some of the largest traders of LNG in the world.
India has used its status as Asia's third-largest LNG buyer to renegotiate deals with Australia and Qatar.
Petronet LNG Ltd, India's biggest importer of liquefied natural gas, in August 2009 signed a 20-year deal to buy 1.44 million tonnes of LNG from Exxon's share in the Gorgon project in Australia. The deliveries under the contract started last year.
Exxon Mobil Corp has agreed to charge 13.9 per cent of the prevailing Brent oil price at the port of delivery rather than previously decided 14.5 per cent of the oil rate at the port of loading. The delivered price was considered too high and so price was renegotiated.
Delivered ex-ship (DES) is a trade term requiring the seller to deliver goods to a buyer at an agreed port of arrival. Under FOB, the buyer has to make the shipping arrangement.
India had renegotiated in 2015 the LNG pricing formula with Qatar's RasGas to buy the gas at half the original price.