GAIL looks to buy up to 26% stake in a US LNG project in bid to secure supply

Apart from a stake, GAIL also wants to import 1 million tonne per annum (MTPA) of LNG from the facility for 15 years, starting the last quarter of calendar year 2026. GAIL is open to extending the supply contract by another five to 10 years. The deadline to submit the expression of interest is March 10.

The company already has term deals for 5.8 MTPA of LNG from US projects, but it does not hold any equity in any US-based LNG unit.

GAIL faced disruption in LNG supplies from a former unit of Russia’s Gazprom due to Western sanctions on Russia in the aftermath of its invasion of Ukraine.

GAIL had inked a 20-year deal with Gazprom Marketing & Trading Singapore (GMTS) in 2012 for 2.5 MTPA of LNG. GMTS was a part of Gazprom’s Germany-based arm Gazprom Germania. Following Western sanctions, Gazprom cut ties with Gazprom Germania and the latter came under the control of Germany’s energy regulator in June last year. GAIL bore the brunt of all this as most of its contracted LNG cargoes were not delivered by GMTS, which led to weak earning performances by GAIL in the previous two quarters.

Apart from making up for the lost LNG volumes of the GMTS contract, for which GAIL is scouting for deals with other global LNG exporters also, the Indian gas major is also looking to expand its LNG portfolio given that gas consumption in India is expected to rise significantly over the next few years. The government has set an ambitious aim to increase the share of natural gas in India’s primary energy mix to 15 per cent by 2030 from a little over 6 per cent at present.

This means that India’s demand for LNG imports is only set to rise over the next few years, even as the global LNG market is expected to remain competitive for buyers. At present, the country depends on LNG imports to meet around half of its natural gas requirement.