GAIL Ltd Nears LNG Import Deal with Qatar for 20 Years

4 Aug 2023 , 12:51 PM

GAIL (India) Ltd is on the verge of finalizing a long-term LNG import deal with Qatar to purchase at least 1 million metric tons per year, potentially spanning over 20 years, according to three industry and trade sources.

The deal is part of GAIL’s strategy to secure new supply contracts by 2030, diversify gas imports, and hedge against potential supply disruptions seen after Russia’s invasion of Ukraine last year, which drove LNG prices to record highs.

GAIL faced gas sales cuts to local industries last year due to supply disruptions under its long-term deal with the German unit of Russia’s Gazprom, which was redirected to Germany’s market after the takeover.

Qatar, the world’s leading LNG exporter, aims to sign record volumes of long-term sales contracts this year, increasing its market share globally at the expense of Russia.

GAIL would be the second Indian company to strike a deal with Qatar, with Petronet LNG, partly owned by GAIL, also in negotiations to extend its long-term LNG deal beyond 2028, under which Qatar supplies 8.5 million tons per year (tpy) of LNG.

A deal with GAIL could enhance prospects for better pricing in the renewal of Petronet’s contract, with India’s goal to finalize both deals by end-September. GAIL plans to purchase 1 million to 1.5 million tpy of LNG from QatarEnergy.

Indian companies are investing significantly in gas infrastructure and seeking long-term deals to raise the share of natural gas in India’s energy mix to 15% by 2030 from the current 6.5%.

GAIL aims to acquire an additional 7 million to 8 million tpy of LNG by 2030, avoiding over-dependence on one country for more than 1 million to 2 million tpy to mitigate the risk of sudden disruptions.

 

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