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GAIL India to skip mid-term LNG deals for 2018 as US imports rise

GAIL has signed contracts for sourcing up to 5.8 million tonnes of LNG from the United States

Reuters  |  Mumbai 


(India) Ltd will skip medium-term liquefied natural (LNG) deals for 2018 as it starts getting supplies from its US portfolio from February, its head of finance said.

"... We used to buy every year one medium-term contract to cater to domestic demand. This year, we are not doing it. So we will be catching that volume from U.S. volumes," told an analyst conference call last week, according to a transcript made available to Reuters on Tuesday.

GAIL, India's biggest natural transmission and marketing company, has signed contracts for sourcing up to 5.8 million tonnes of from the

The company is also likely to cut its spot purchases once volumes from the begin, Purkayastha said, adding that in 2018 expects to obtain close to 80 cargoes from the

The company currently sells close to 35 million cubic metres per day (mcmd) of super-cooled gas, of which close to 17 mcmd is procured through medium-term and spot purchases.

India wants to raise the share of natural in its energy mix to 15 per cent in the next few years from about 6.5 per cent now. But price-sensitive customers in the South Asian nation forced renegotiation of the price of two long-term deals.

Pricing of US is linked to a formula but other charges including freight to India add an extra $2-$3 per million British thermal units, leading to scouting for destination, time and volume swap deals.

Purkayastha said has swapped about 30 per cent of its U.S. volumes through destination swaps. The company has kept some US volumes for trading, while selling some through time-swap and direct sales in international markets.

"So for 2018, we are now quite comfortable," he said.

In March, India signed its first time-swap deal with Swiss trader Gunvor to sell some of its US It has also sold some of the US volume to Shell

India's demand could rise by about 10 per cent in 2018/19 from about 140 mcmd now as the country expands capacity of power generation and fertiliser production.

India's oil minister Dharmedra Pradhan asked state-run on Tuesday to boost supply of and alternate fuels in the states where use of petcoke and furnace oil is banned to cut emissions.

demand in the country will further rise when three new fertiliser plants begin operating in 2020/21 and that would help absorb some of the US LNG, Purkayastha said.

First Published: Tue, November 21 2017. 22:50 IST