INDIA NEED LNG

PLATTS - 30 May 2022 - India's state-run gas utility GAIL is eyeing a one million mt LNG import deal for 10 years starting 2023 to quench the country's growing appetite for cleaner fuels amid rising energy needs, company Chairman and Managing Director Manoj Jain said May 27.

"The main consideration of buying LNG will be competitive prices from anywhere including Russia," Jain said at a presser to coincide with the company's latest quarterly results announcement, adding that GAIL did not rule out procuring extra LNG from Russia's Gazprom, even though the West is seeking to phase out Russian gas imports due to Moscow's invasion of Ukraine.

Currently, GAIL has a term LNG import deal in place with Gazprom's Singapore-based trading arm. The average size of the current term deal is 2.5 million mt/year, which Gazprom has been increasing progressively on GAIL's demand.

GAIL imported 2 million mt LNG from the Russian supplier in 2021, while imports have been pegged at 2.5 million mt for 2022 and 2.85 million mt in 2023, company officials said at the same event.

Jain said GAIL's total natural gas imports could increase 5%-6% on the year in fiscal year 2022-23 ending March 31, 2023.

"We aren't looking at short-term contracts as they are costlier," Jain said. He forecast global LNG spot prices to be in the range of $20-$24/MMBtu in the medium term even though prices would stay volatile in the short run.

Stable long-term supplies

The company officials said Gazprom recently had rescheduled delivery of one LNG cargo to June delivery from May amid difficult market conditions.

GAIL remained confident of receiving regular supplies from Gazprom, they 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," Jain said.

Meanwhile, GAIL has also been mandated to import more LNG for city gas distribution networks.

A policy guideline from the Ministry of Petroleum and Natural Gas Division on May 6 said GAIL will supply pooled natural gas 2.5% over and above the 100% requirement of the compressed natural gas for transport, and the piped natural gas domestic segments of each geographical area mentioned in the quarterly allocation period.

For now, GAIL will buy one LNG cargo from the spot market every 30-40 days to meet city gas demand, Jain said.

India aimed to raise the share of gas in its overall energy mix to 15% by 2030 from the current 6.7%. However, the plan to reach this level will likely be delayed by 12-24 months due to the Ukraine-Russia war, he said.

Sustainability

In a release May 27, Jain also said GAIL had awarded a contract to set up India's largest electrolyzer to produce hydrogen. The company was embarking on development of alternative energies like green hydrogen, renewables and biofuels projects of national importance to offer a viable energy transition pathway, he said.

GAIL has also carried out a prefeasibility and techno-commercial study to assess the potential for installation of solar power plants at its sites across India, according to its website. The objective of this project is in alignment with the government's aspirational target of achieving 175 GW of renewable energy installed capacity by 2022.

As the study has been completed, the installation of rooftop solar plants has already begun at feasible locations, it said.

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