British gas company BG Group has signed an initial agreement to sell 2.5 million tonnes of liquefied natural gas (LNG) to Gujarat State Petroleum Corp (GSPC) under a 20 year deal with supplies beginning as early as 2014, a company statement said on Thursday.
India, which relies on imports for four-fifth of its oil needs, is scouting for overseas gas deals to lock supplies for its expanding LNG infrastructure and cushion against global price fluctuations.
India's LNG import capacity will reach 47.5 million tonnes per annum (mtpa) in 2015-16 from 13.5 mtpa now.
Earlier on Thursday gas firm GAIL(India) said it had agreed to buy a 20 percent stake in one of Carrizo Oil & Gas Inc's shale gas assets in the United States.
Gas accounts for about 10 percent of India's primary energy basket versus the world average of 24 percent, and India's gas demand is expected to grow at 14 percent in the next five years, junior oil minister R.P.N. Singh said last week.
But local gas output has been falling. India's gas output fell an annual 8.9 percent during April-August mainly due to declining output from Reliance Industries operated D6 block, the country's biggest gas producer.
Energy major BP, which agreed to buy 30 percent stake in D6 and other Reliance-operated blocks, expects output from D6 would begin to rise from 2014.
"BG Group and GSPC intend to complete negotiations and execute a fully-termed LNG sales and purchase agreement early next year," the BG statement said.
With an increase in U.S. domestic gas output, suppliers have turned their focus to growing markets in Asia.
Asian LNG imports are expected to reach 152 million tonnes this year, according to one analyst's estimate, which would be a 15 percent increase on 2010. By 2020, it could jump to nearly 225 million tonnes.
Earlier this year Russian gas exporter Gazprom signed deals to sell 7.5 million tonnes/year of LNG to three Indian customers.
(Reporting by Nidhi Verma; editing by James Jukwey)