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DUBAI, Oct 1 (Reuters) - Russia's Gazprom Marketing and Trading has signed a legally binding agreement to supply liquefied natural gas (LNG) to India's GAIL for 20 years, the companies said on Monday.
Under the terms of the agreement, GAIL will receive 2.5 million tonnes of LNG sourced from Gazprom's own production facilities and global trading portfolio, they said in a statement.
The price GAIL pays the Russian gas giant will be based on an oil-indexed formula and the gas will be delivered to Indian LNG import terminals at Dahej, Dabhol and Kochi.
"We are looking forward to working together with GAIL to help meet India's expanding gas demand whilst securing a long-term market for Russian gas," Vitaly Vasiliev, CEO of Gazprom Marketing & Trading, said.
Gazprom operates the Sakhalin-2 LNG plant, the only such enterprise in Russia, with annual production of 10 million tonnes. It plans to double LNG capacity by building another plant in the Pacific port of Vladivostok.
GAIL is looking for additional LNG supplies to meet rapidly rising demand for fuel in one of the world's fastest growing energy markets and is also considering buying production assets.
"The deal with Gazprom reinforces GAIL's commitment to facilitate the development of the Indian market," GAIL chairman B. C. Tripathi said.
"The deal also marks our efforts to create a well-diversified and secured supply portfolio." (Reporting by Daniel Fineren; Editing by Mark Potter)