(Adds detail of LNG source, Gail's 2018 buying strategy)
By Nidhi Verma and Oleg Vukmanovic
NEW DELHI/LONDON, Jan 16 (Reuters) - Gas utility GAIL (India) Ltd has renegotiated the terms of a long-term liquefied natural gas (LNG) purchase deal with Russia's Gazprom , the Indian company said on Tuesday.
This is the third such negotiation by India to make the imported fuel more affordable to its price-sensitive customers.
India has been making the most of its position as one of the world's biggest energy consumers to strike better bargains for its companies.
In recent years it renegotiated long-term LNG deals with Qatar's RasGas and Exxon Mobil Corp as spot prices declined substantially amid a supply glut, strengthening the hand of buyers chafing at high contract prices.
Under the re-worked deal, GAIL and Gazprom have extended the duration of the deal by two to three years and the Indian company has agreed to buy an additional six million tonnes of LNG volumes, a source familiar with the matter said.
The pricing of the super-cooled fuel has been changed from 9 month linkage to Japanese Customs cleared crude to three months average of Brent, the source said.
In the initial three-year period, GAIL will be buying lower volumes -- 0.5 million tonnes in the first year, 0.75 million tonnes in the second year and 1.5 million tonnes in the third year.
"Remaining volumes of the first three years will be picked up in the subsequent years," this source said.
GAIL signed the deal with Gazprom Marketing & Trading Singapore in 2012 to buy 2.5 million tonnes of LNG per year for 20 years on a delivered basis. The supplies were scheduled to start in the second quarter of 2018.
"The two parties have agreed to an adjustment to the price and the volume of LNG supply, thus enabling GAIL to develop incremental gas markets to offtake these volumes, thereby mitigating volume risk," GAIL said.
The move will diversify GAIL's LNG portfolio by spreading price reference indexes across multiple geographies, so as to give consumers greater flexibility in service, Chairman B. C. Tripathi said in a statement.
When the deal was first signed, Gazprom envisaged supplying India with LNG from its planned Schtokman project in the Barents Sea, which was subsequently scrapped as the shale gas revolution in the United States removed a key customer base.
The resulting contractual inconsistency gave GAIL a foothold to re-open the Gazprom deal, sources familiar with the matter said, kicking off talks in which it sought to delay the first LNG deliveries until 2020.
Gazprom Marketing & Trading Chief Executive Vitaly Vasiliev said LNG supplies would begin in 2018.
In talks with GAIL, Gazprom discussed changing the origin of the LNG to the newly built Yamal plant in the Russian Arctic, industry sources said.
Gazprom agreed to buy 2.9 million tonnes of LNG per annum over 20 years from Yamal, which shipped its first cargo in December.
GAIL has also signed contracts for sourcing up to 5.8 million tonnes of LNG from the United States.
However, under GAIL's 2018 delivery programme, the company does not expect to receive any LNG from the United States following a series of swap deals with Royal Dutch Shell and trader Gunvor, a source with knowledge of the matter said.
Separately, GAIL is renegotiating its LNG purchase deals with U.S.-based Cheniere Energy and Dominion Energy, Oil Minister Dharmendra Pradhan told lawmakers last month.
The importer over-committed to new LNG volumes earlier this decade when supply was scarce and buyers pounced to sign new deals. (Reporting by Nidhi Verma; Editing by Subhranshu Sahu, Alexander Smith and Adrian Croft)