GAIL contracts more LNG than it needs

Vol 17, PW 7 (31 Oct 13) Midstream & Downstream

GAIL is under pressure to find foreign buyers for LNG surplus to its Indian requirements.

GAIL will receive 8.3m t/y of LNG from 2016-17 on three long-term contracts. Two are 20-year 'use or pay' US deals signed in 2011 and 2013 worth more than $40bn.

A third deal with Gazprom, also for 20 years, is worth an undisclosed amount. "GAIL's turnover is $8bn and if I don't have customers lined up what do I do with this gas" questions a senior GAIL source.

"If anything goes wrong I may lose the complete net worth of my organisation." GAIL hopes to sell LNG to two of Asia's largest consumers Japan and South Korea. "We are also looking at Argentina and other Latin American countries - even Pakistan," adds GAIL.

In Japan, GAIL is talking to TEPCO (Tokyo Electric Power Company) and city gas distributor Tokyo Gas. In South Korea, state-owned KOGAS (Korea Gas Corporation), the world's largest LNG importer, is a possible customer.

By December, GAIL will decide how many LNG tankers it needs. "If everything comes to India we will need 10 tankers," we hear.

"But if some LNG goes to other countries we might need only six or seven. For now GAIL is lobbying the power and fertiliser ministries to detail their LNG requirements and has held 17 meetings since mid-June.

LNG Summit