GAIL searches for LNG suppliers and intends to increase long-term quantities by 50%

27 Jul 2023 , 11:28 AM

According to GAIL’s chairman, the company is planning to secure 7-8 million tonnes per year of long-term liquefied natural gas (LNG) from a variety of sources as it places a large bet on domestic gas consumption and seeks to take the lead in India’s transition to a gas-based economy.

‘GAIL is dedicated to making sure that the domestic demand is adequately met and safeguarded against price shocks. To achieve the same, GAIL plans to gradually increase its long-term volumes by at least 50%, or 7-8 million metric tonnes annually, through the year 2030, according to an ET interview with Sandeep Kumar Gupta, chairman and managing director of GAIL.

He noted that the company is in discussions with suppliers in a number of nations, including the US, Qatar, the UAE, and other nations east of India.

Last October, in the midst of a worldwide energy crisis when a former German subsidiary of Russia’s Gazprom had stopped supplying, Gupta—the former finance head of Indian Oil Corp.—took over as the chairman and managing director of GAIL.

‘We did a good job. Since we imported US amounts to satisfy their demand, the supply cut to our customers was substantially smaller, according to Gupta. Supplies resumed this year as the world markets stabilised, but GAIL had learned its lesson.

Because there is no pricing certainty, the rate of CNG vehicle conversion is now slower than ‘we would want,’ he said. Nobody is certain how long the price cap on domestic petrol, which is provided as CNG, will last.

As various gas exporting nations increase their capacity for liquefaction, an ample global supply of gas is anticipated starting in 2027, Gupta told ET. ‘Unlike with oil, there is no cartel of petrol suppliers, so the plentiful supply should drive prices down to levels that are within reach.’

Building strategic gas reserves is something the nation should think about doing as it transitions to a gas-based economy because it would ‘help us shield from short-term volatility,’ he said.

GAIL has raised roughly Rs 1,500 crore, according to Gupta who talked to ET. GAIL wants to raise a loan of Rs 5,000–7,000 crore this fiscal year for capital expenditures.

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