Former Russian unit resumes regular LNG supplies to GAIL

New Delhi: A former unit of Russian energy giant Gazprom has resumed supplying LNG to state-owned gas utility GAIL a year after it halted supplies due to the Ukraine war. Sefe Marketing and Trading Singapore Pte Ltd (SMTS), erstwhile Gazprom Marketing and Trading Singapore Pte Ltd, supplied two liquefied natural gas (LNG) cargoes each in March and April and has committed four shiploads each in May and June, GAIL (India) Ltd Chairman and Managing Director (CMD) Sandeep Gupta said on Thursday. "Hopefully, similar volumes will be nominated for future months also," he said.

GAIL signed 20-yr deal with GMTS to buy 2.85 MTPA of LNG

GAIL had in 2012 signed a 20-year deal with Gazprom Marketing and Singapore (GMTS) to buy 2.85 million tonnes per annum of LNG. Supplies started in 2018 and the full volume was to reach in 2023. GMTS had signed the deal on behalf of Gazprom. GMTS was moved to Gazprom Germania, now called Sefe. But in early April last year, Gazprom gave up the ownership of the German unit without giving a reason and placed parts of it under Russian sanctions. This followed the West slapping sanctions on Russia for its February 24 invasion of Ukraine. It invoked force majeure and stopped supplies to India from June 2022. Gupta said that normal supplies have resumed and hope they will continue.

Sefe, formerly known as GMTS, "in its annual delivery plan and in their latest communications have maintained their alleged force majeure stance citing various reasons such as Russian sanctions on its LNG source/portfolio and mandate from German authorities (BnetzA) for ensuring energy security for Europe for their inability to deliver LNG cargoes," Minister of State for Petroleum and Natural Gas Rameswar Teli had told Lok Sabha in a written reply to a question on March this year. However, "while SMTS maintains its force majeure stance, as on date SMTS has informed that they shall be able to supply two cargoes (shipload) in March and two in April," he had added.

GAIL imposed supply cuts from mid-July 2022 to mid-March 2023

To mitigate the shortfall in Russian supplies, GAIL imposed supply cuts to users from mid-July 2022 to mid-March 2023. In order to meet the shortage, GAIL sourced spot LNG volumes from the domestic/international market and also partially/fully stopped its petrochemical complex at Pata in Uttar Pradesh to fulfilling supply obligations to the customers. Gupta said that all the supply cuts have been restored with effect from March 16.

2.85 MT of LNG to reach in 2023

Under the deal, GMTS was to progressively increase supplies to GAIL. It shipped two million tonnes of LNG in 2021 and was to supply 2.5 million tonnes or a minimum of 36 cargoes in the calendar year 2022. The full volume of 2.85 million tonnes is to be reached in 2023. GAIL received one cargo of LNG in June 2022 and nothing after that. Company officials said that Sefe was supplying cargoes from its non-Russian portfolio in Egypt, United Arab Emirates and the United States. Because of the force majeure, they cannot supply from Russia, so they are giving GAIL LNG from non-Russian portfolios.

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