Nearly a year after Russian gas supplier giant Gazprom stopped supplies to India due to the ongoing war, it has resumed supplies of liquefied natural gas (LNG) to Indian state gas utility GAIL. According to Sandeep Kumar Gupta, chairman of GAIL, the availability of gas in the country has increased since supply was restored in June last year.
Separately, six US companies have offered stake to GAIL in its Liquefied Natural Gas export facility. Gupta said SAFE Marketing and Trading Singapore Pte Ltd (SMTS), then Gazprom Marketing and Trading Singapore Pte Ltd, supplied two liquefied natural gas (LNG) cargoes each in March and April and 4 shiploads each in May and June. Did it “It is expected that similar volumes will be renominated for future months as well,” he added.
SAFE will decide the volume on a month-to-month basis. GAIL had in 2012 signed a 20-year contract with Gazprom Marketing and Singapore (GMTS) to buy 2.85 million tonnes per annum of LNG. Supplies began in 2018 and full quantities were to be reached by 2023.
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GMTS signed the agreement on behalf of Gazprom. GMTS was moved to Gazprom Germania, now called Sefe. But at the beginning of April last year, Gazprom gave up ownership of the German unit without giving a reason and placed parts of it under Russian sanctions.
After this, Western countries imposed sanctions on Russia for the invasion of Ukraine on 24 February. It invoked force majeure and stopped supplies to India from June 2022. Gupta said normal supplies have resumed and are expected to continue.
On expression of interest issued by GAIL in February this year to buy up to 26 per cent stake in a US LNG export facility in an effort to ramp up supplies to meet growing demand in India, it said half a dozen interests have been received. “We are in the process of selection for the second phase,” he said without giving details.
The company had issued an expression of interest in February to acquire 26 per cent equity in an existing LNG plant or a proposed facility to be operational by 2027. It was also interested in sourcing one million tonnes per year of LNG from the facility. For 15 years from 2026. The contract can be further extended for 5 to 10 years. Liquefaction plants convert natural gas into liquid form, enabling its ocean transportation.
Last year, supplies to GAIL (India) Ltd were disrupted after Russian-owned Gazprom Marketing and Trading (GMTS) failed to deliver contracted LNG due to Western sanctions on Moscow over its invasion of Ukraine.
To meet the shortfall, GAIL cut supplies to some customers, including its own petrochemical plants, and bought LNG from the spot or existing market.
It is also in discussions with Abu Dhabi National Oil Company and Russia’s Novatek PJSC for long-term LNG deals. SAFE, formerly GMTS,” in its annual delivery plan and its latest communication, cited various reasons such as Russian sanctions on its LNG source/portfolio and mandate from German authorities (Benetza) to ensure energy security for Europe. Unforeseen situation has persisted for its inability to deliver LNG cargo,” Minister of State for Petroleum and Natural Gas Rameshwar Teli had told the Lok Sabha in a written reply to a question on March 23 this year.
However, “while SMTS maintains its unpredictable stance, as on date SMTS has informed that they will be able to supply two cargoes (shiploads) in March 2023 and two in April 2023,” he had said.
To mitigate the shortfall in Russian supplies, GAIL has cut supplies to users from mid-July 2022 to mid-March 2023.
To meet the shortfall, GAIL procured spot LNG volumes from the domestic/international market and partially/fully shut down its petrochemical complex at Pata in Uttar Pradesh to meet supply obligations to customers. Gupta said all supply cuts have been restored from March 16. Under the deal, GMTS was to progressively increase supplies to GAIL. It shipped 2 million tonnes of LNG in 2021 and was to supply 2.5 million tonnes or a minimum of 36 cargoes in calendar year 2022. The full volume of 2.85 million tonnes is to be reached in 2023.
GAIL got one cargo of LNG in June 2022 and nothing after that. Company officials said SAFE was supplying cargo from its non-Russian portfolio to Egypt, the United Arab Emirates and the United States. Due to force majeure, they cannot supply from Russia, so they are giving GAIL LNG from non-Russian departments.
(With inputs from PTI)