GAIL plans another LNG swap deal with Shell

Vol 20, PW 22 (27 Jul 17) News in Brief

GAIL is expected to make a major announcement soon about a deal to swap US LNG with Shell.

GAIL already signed a deal with Shell in 2015 to sell 500,000 t/y of its US LNG. But now it is believed to have finalised an even more attractive arrangement where it will be swapping a larger quantity.

"The quantity is not known yet," says a well-placed source. "But it is going to be a big deal and in GAIL's best interests." GAIL's 20-year deal for 3.5m t/y LNG from Cheniere Energy starts next year (2018) leaving it scrambling to sell expensive $8.50/mmbtu US gas.

"Under the swap arrangement Shell will take the expensive US gas and provide GAIL with cheaper gas from its global portfolio," we learn. Of the total 3.5m t/y, GAIL wants to swap at least 2m t/y.

In February 2017, GAIL signed its first swap deal with Swiss LNG trader Gunvor. Under the 12% Brent linked deal, Gunvor will deliver 800,000 tonnes over 15 cargoes delivered between April and December 2017 at Dahej.

Since May, GAIL has received five cargoes from Gunvor at between $6.50 and $6.80