Gazprom’s suspension of gas supply to GAIL to hit govt’s 1000 LNG stations outlook

26 Dec 2022 , 01:01 PM

The suspension of natural gas supply to state-owned GAIL by Russian gas company Gazprom has thwarted the government’s plan to build 1,000 liquefied natural gas (LNG) fueling stations across the country, according to two industry officials aware of the development. This will cause domestic marketing companies to scramble for new LNG supplies.

In November 2020, the government announced plans to build 50 LNG fueling stations along national highways and the Golden Quadrilateral connecting Delhi, Mumbai, Chennai, and Kolkata.

The goal was to replace diesel and gasoline in long-distance vehicles with cleaner fuel, as well as to achieve a 15% share of natural gas in India’s total energy mix by 2030. 

The second phase of the expansion plan called for the construction of 1,000 LNG fueling stations at a cost of Rs10,000 crore over three years. However, the Russia-Ukraine conflict has driven up LNG prices and created a fuel shortage.

Gazprom suspended the supply of 2. 4 million tonnes per annum (MTPA) of long-term LNG to GAIL in May. So far, this has not been reinstated. GAIL has attempted to reduce the 8-9 million metric standard cubic metres per day (mmscmd) shortfall by reducing supplies to the fertiliser and power sectors, as well as cutting off utilization of its own Pata petrochemical plant situated in Uttar Pradesh, to 40%.

Long-term contracts account for more than 80% of India’s LNG supplies, and the country has been looking for term LNG from other countries such as Angola and Algeria.

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