Last updated: February 17, 2023, 6:09 PM IST
India’s largest gas company, GAIL, is looking to buy a stake of up to 26 percent in an LNG project in the United States in a bid to bolster sources of supply to meet rising demand. GAIL (India) Ltd, suffered supply cuts last year after Russia-owned Gazprom Marketing and Trading (GMTS) failed to deliver the contracted LNG due to Western sanctions against Moscow over its invasion of Ukraine.
The company has launched a tender requesting expressions of interest (EoI) from operators of existing liquefied natural gas (LNG) liquefaction plants or proposed projects in the U.S. that will be commissioned by 2027. Liquefaction plants convert natural gas into liquid form, enabling transportation by sea.
The company also plans to purchase 1 million tons of LNG per year from the facility over 15 years, beginning in the last quarter of calendar year 2026, according to the tender document.
GAIL is open to extending the supply contract for another 5 to 10 years.
The EoI submission deadline is March 10.
GAIL already has contracts to purchase 5.8 million tons of LNG annually from the US and is looking to increase supplies to meet Russia’s shortfall and rising demand from a growing economy.
Prior to this, Petronet LNG Ltd – a company in which GAIL is one of the promoters with a 12.5 percent stake – had signed a non-binding agreement in September 2019 to invest $2.5 billion in US energy startup Tellurian’s LNG project in Louisiana in gas supply returns for 40 years.
That pact expired at the end of 2020 without a final deal being signed.
Petronet would purchase up to 5 million tons of LNG per year from Tellurian Inc’s proposed Driftwood LNG terminal for 40 years. The deal coincided with Petronet making a $2.5 billion equity investment for an 18 percent stake in Driftwood.
At that point, Petronet’s promoters questioned the rationale of making an equity investment and committing such large volumes from one supplier for 40 years.
To satisfy promoters and to test whether Tellurian’s LNG would be competitive, Petronet invited bids to purchase 1 million tons of LNG per year for 10 years. Tellurian was one of 13 suppliers who quoted in the tender but failed to meet price expectations.
“GAIL is exploring, either directly or through one of its affiliates, the opportunity to acquire up to 26 percent equity at par of existing U.S. LNG liquefaction plant/project” or those to be commissioned no later than calendar year 2026/27 taken, the tender document said.
In addition, GAIL “is interested in sourcing 1 million tons of LNG from the LNG liquefaction plant/project on an FOB basis over a period of 15 years on mutually acceptable terms,” it said.
Separately, GAIL is in talks with Abu Dhabi National Oil Co and Russia’s Novatek PJSC for long-term LNG deals, chairman Sandeep Kumar Gupta said at a conference last week. The current 5.8 million tons of LNG import agreements from US projects do not include equity participation.
GAIL had signed a 20-year agreement with GMTS in 2012 to purchase 2.5 million tons of LNG annually. GMTS was part of Gazprom Germania, now called Sefe, but the parent company left the company last April following Western sanctions.
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(This story has not been edited by News18 staff and was published from a syndicated news agency feed)