GAIL advances US gas supplies, eyes new deals to meet India’s energy demand

GAIL (India) Ltd has advanced the supply of gas from the US and is looking to contract more LNG next year as it doubles down efforts to secure affordable energy supplies to meet the needs of Asia’s third-largest economy, GAIL’s chairman Manoj Jain said.

India’s No.1 gas transporting and marketing firm has long-term liquefied natural gas (LNG) supply contracts from the US to Australia and with Russia, supplementing domestic gas supplies.

“In 3Q (October-December 2021) we preponed a couple of cargoes (LNG shiploads) from supplies that we were to receive next year and we did it again in the current quarter,” Jain told PTI. This because US LNG costs one-third of the price of gas available in the spot or current market.

GAIL has a 5.8 million tonnes per annum LNG contract with US suppliers. These are all linked to the US gas market, Henry Hub where the current rate is $ 5.45 per million British thermal unit. In comparison, the spot price of LNG in Asia is $ 15.5 per million British thermal unit (mmBtu).

GAIL is also doing destination swaps to cut shipping costs of US LNG. Under this, it would sell the US LNG to a buyer say in Europe and get an equivalent volume from a supplier nearby like in the Middle East.

Gas demand, he said, is already above pre-Covid levels and it will continue to rise further with the expansion of the city distribution network for CNG and piped cooking gas in more areas as well as the start of fertilizer plants.

The firm traded (or sold) 96.6 mmscmd of gas in 3Q and the same is likely to rise by up to 6 mmsmd in coming months as supplies to new fertilizer plants in the east starts, he said. While gas transmission volumes are projected to rise to 131 mmscmd by FY24, trading volumes may surge to 104.5 mmscmd by March 2024. Besides the US, GAIL gets 2.5 million tonnes per annum of LNG from the Gazprom of Russia. Through Petronet LNG Ltd, it gets 4.8 million tonnes of LNG on a long-term contract from Qatar and another 0.4 million tonnes from the Gorgon project in Australia.

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