Gail India seeks 1 MMT LNG term deal as demand soars

Industry Outlook Team | Tuesday, 31 May 2022

Text Size:

Gas utility Gail India is looking to import one million metric tonnes (MMT) of additional LNG for 10 years beginning 2023 to meet the country's rising demand for the fuel.

"We are trying to buy at least 1 MMT LNG more for 10 years. Whatever we were selling in the international market, we are trying to bring to India as demand here has increased," Manoj Jain Chairman and Managing Director.

Jain added that the company is also talking to many players bilaterally to get a sense of the market and once the company zeros in on certain geographies, it would float expressions of interest.

"Also, since demand is increasing in the country, we are diverting LNG from our international portfolio to the Indian market.

So, we need gas even for that international portfolio," added Jain.

Gail, which has been mandated to import gas and buy from newer domestic fields to meet growing demand from households (piped natural gas) and the transport sector (compressed natural gas), saw its natural gas sales increase 6% and is anticipating a 6-8% increase in gas sales this fiscal year.

Gail will be supplying pooled natural gas 2.5% over and above the 100% requirement of the compressed natural gas (CNG) for transport, and the piped natural gas (PNG) domestic segments of each geographical area mentioned in the quarterly allocation period.

"Gail will buy one LNG cargo from the spot market every 30-40 days to meet city gas demand," Jain added. The company did not rule out procuring additional LNG supplies from Russia's Gazprom, even as the European Union is working toward an agreement to embargo Russian oil after Russia's invasion of Ukraine.

The company said, currently it has a term LNG import deal in place with Gazprom's Singapore-based trading arm where it imports 2.5 MMT annually.

Gail imported 2 MMT LNG from Gazprom in 2021, and plans to import at 2.5 MMT for 2022 and 2.85 MMT in 2023, the company said, adding that India's target to increase share of gas in its overall energy mix to 15% by 2030 from the present 6.7%, could be delayed by 12-24 months due to the Russia-Ukraine war.