GAIL to tap spot LNG markets to meet increased demand of electricity

GAIL (India) Ltd will tap spot liquefied natural gas (LNG) markets to address surging power demand, an executive at the state-run company said on Thursday, as the Indian government calls for more supplies to address an electricity crunch.

Much of India's domestic gas supply is already committed, Sanjay Kumar, marketing director at India's top distributor of natural gas, said on the sidelines of the Gastech conference

"So if there is actually demand, we will buy," Kumar said, declining to comment on volumes.

"We have been servicing the demand for the last one month also. Demand is already there," he said.

Over half of India's roughly 25 gigawatts (GW) of gas-fired power capacity is non-operational because of relatively high LNG prices. The share of gas-fired power in overall output has fallen from an average of over 3% in the last decade to less than 2% currently because of the high prices.

Kumar told the conference that the LNG market is likely to remain "slightly soft" for the next two or three years.

"And that gives us comfort. We believe that we will mostly be working through long-term contracts to the extent required for meeting seasonal demand. For unseasonal volatility in demand, we will manage through the market," he said.

India is seeking additional volumes of natural gas and has asked utilities to expedite completion of power plant maintenance as part of emergency steps to stop electricity outages, according to a government note dated Sept. 5 and reviewed by Reuters.

(Reporting by Sudarshan Varadhan and Chen Aizhu; Writing by Tony Munroe; Editing by Clarence Fernandez and Christian Schmollinger)