Adani replaces GSPC with GAIL for all gas needs

Vol 17, PW 22 (19 Jun 14) Midstream & Downstream
     

GAIL’s willingness to be flexible about contract duration has convinced Adani Gas to abandon GSPC for all its gas needs.

GAIL began supplying 400,000 cm/d R-LNG in May to Adani at $17.50/mmbtu on a one-year contract to supplement 470,000 cm/d cheap APM gas at $4.20/mmbtu it already supplies. In one stroke GAIL thus becomes Adani's sole supplier for its total gas requirement of between 800,000 cm/d and 1m cm/d, completely replacing GSPC.

Adani shifted to GAIL after GSPC refused to give it a one-year contract for about 400,000 cm/d, demanding instead a minimum 15-year contract. Adani objected strongly, saying it wasn’t happy with such a long contract.

Adani’s reluctance is explained by the company’s 25% stake in the proposed Mundra LNG terminal, partnering GSPC with 50% and a yet to be decided third strategic partner, most likely BG and Reliance joint venture India Gas Solutions (IGS). When commissioned, most likely in three to four years, Mundra would allow Adani to source its own gas.

“Locking-in to gas supplies from GSPC for 15-years,” says an industry source, “would be a foolish proposition.” When contacted an Adani source confirms it has signed a contract with GAIL for one year, at a slight premium.

GAIL is charging $0.50/mmbtu more than GSPC’s offer of $17/mmbtu.

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