Friday, June 24, 2022

GAIL will buy one LNG cargo every 30-40 days to meet rising city gas demand: CMD

GAIL will buy one LNG cargo from the spot or the current market every 30-40 days to meet the rising city gas demand, said its CMD Manoj Jain

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  • Jain said that GAIL will buy natural gas from domestic difficult fields and also spot LNG to meet demand from city gas distributors
  • The GAIL CMD said that the company is scouting for more long-term LNG contracts to meet the growing local demand all across the globe, including Russia

New Delhi: GAIL (India) Limited will buy one LNG cargo from the spot or the current market every 30-40 days to meet the rising city gas demand, said its Chairman and Managing Director (CMD) Manoj Jain on Friday. Addressing the media at a press conference, Jain said that GAIL will buy natural gas from domestic difficult fields and also spot LNG to meet demand from city gas distributors. The statement comes nearly two weeks after the government asked GAIL to tie up more gas imports or buy from local difficult fields to meet the rising city gas demand.

City gas distributors (CGD) are prioritised in half yearly allocation of gas from old fields, which is currently sold at $6.1 per million British thermal units (mmBtu). A shortfall, if any, is met through imports. The government has plans to raise the share of natural gas in the economy from the current 6 percent to 15 percent by 2030.

GAIL open to acquiring assets, buying gas from Russia: CMD

On being asked whether the company would consider buying gas from Russia in the wake of the directive issued by the government, the GAIL CMD said that the company is scouting for more long-term LNG contracts to meet the growing local demand all across the globe, including Russia.

“We aren’t looking at short-term contracts as they are costlier. We want 1 million tonnes per annum of long-term supplies to begin with,” he said, adding GAIL was looking at a 10-year deal with supplies starting January 2023. GAIL plans to import 5-6 percent higher LNG volume in the current 2022-23 fiscal.

On being asked about whether GAIL would consider making investments in Russian projects, he said the PSU may consider it, if it makes economic sense. He, however, added that there is nothing on the table yet. “We can look at it provided it has economic value,” he said.

The US and European nations have imposed heavy sanctions on Russia since Moscow sent troops into Ukraine on February 24. Some western oil firms have announced their exit from Russian projects and Indian firms are being considered a natural candidate to join in.

However, India has raised oil imports from Russia after the Ukraine war despite criticism from the West and continues to engage with Moscow for business.

GAIL getting regular supplies from Russia’s Gazprom

GAIL is getting regular supplies of LNG under a long-term deal with Russia’s Gazprom despite the geopolitical crisis, the CMD said. GAIL has a long-term deal to import 2.85 million tonnes per annum of liquefied natural gas (LNG) from a Singapore-based unit of Gazprom. “There were some disruptions but supplies have been regular,” Jain told reporters.

Earlier this month, Moscow slapped sanctions on the owner of the Polish part of the Yamal pipeline that carries Russian gas to Europe, as well as the former German unit of the Russian gas producer Gazprom.

Sanctions, aimed at stopping the flow of Russian gas to Europe, have been imposed on Gazprom Germania, and 29 of its subsidiaries in Switzerland, Hungary, Britain, France, Bulgaria, the Benelux region, the United States, Switzerland, Romania and Singapore.

GAIL has a contract with the Singapore unit.

“We learn from media reports that the sanctions have been put in abeyance for 90 days,” Jain said, adding the company was in talks with Gazprom over supplies.

Gazprom Marketing & Trading Singapore, he said, has been supplying LNG regularly under a long-term deal.

There have been minor adjustments such as splitting of shipments and rescheduling one cargo that was supposed to be delivered this month, he said.

“We don’t see any disruption in our supplies under the deal as ours is a portfolio contract, meaning Gazprom can supply gas from anywhere in the world,” he said.

Gazprom is supplying LNG from Russia as well as its global portfolio.

GAIL expects Gazprom to supply about 40 LNG shipments in 2022, and a full contracted volume of 46 cargoes in 2023, under its term deal.

Under the deal, Gazprom is progressively increasing supplies to GAIL. It has shipped 2 million tonnes of LNG in 2021 and is to supply 2.5 million tonnes in 2022. The full volume of 2.85 million tonnes is to be reached in 2023.

Awaiting approvals on asset monetisation plan: CMD

Commenting on the company’s plan to monetise two of its pipelines, the GAIL CMD said that they are awaiting approvals and will move forward with the process once they are in place. Jain said that GAIL is planning to monetise two of its pipelines of length 2,100 km under the asset monetisation plan.

Over the next three years, GAIL plans to invest around Rs 30,000 crore in pipelines, city gas distribution plans, among others, said the CMD.

(With agency inputs)

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