April 12, 2018 / 8:02 AM / 3 months ago

UPDATE 1-India's GAIL says LNG supply from Gazprom will start from May

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By Promit Mukherjee and Nidhi Verma

NEW DELHI, April 12 (Reuters) - India’s state-owned gas supplier and developer GAIL Ltd plans to buy 0.5 million tonnes or eight cargoes of liquefied natural gas (LNG) from Russia’s Gazprom in 2018/19, its chairman and managing director B.C. Tripathi said.

“The cargoes will start coming from May,” Tripathi told Reuters on Thursday at the International Energy Forum.

GAIL renegotiated the terms of a long-term 2.5 million tonnes per annum (mtpa) liquefied natural gas (LNG) purchase deal with Russia’s Gazprom in January.

This was the third such renegotiation by India with LNG suppliers to make the imported fuel more affordable, using its position as one of the world’s biggest energy consumers to strike better bargains for its companies.

India has also renegotiated long-term LNG deals with Qatar’s RasGas and Exxon Mobil Corp as spot prices declined substantially amid a supply glut that turned trading of the seaborne gas into a buyers’ market.

GAIL is planning to get as much as 5 million tonnes of LNG from the United States as well, equivalent to about 80 cargoes throughout the fiscal year, Tripathi said.

He said half of the U.S. LNG cargoes could be swapped for shipments from other suppliers, depending on available terms.

“Swapping is a continuous process and we are doing it regularly. We have swapped three so far in this year,” he said, although he added that GAIL did not expect to swap any of the Gazprom cargoes this year.

The much-delayed Kochi-Mangalore natural gas pipeline, which can open up a substantial latent demand in South India, will be ready by November, he said.

The pipeline will connect Petronet LNG’s 5 million-tonne-per-year regasification terminal at Kochi in southern India to demand centres in and around Mangalore, including a refinery run by Bharat Petroleum Corp Ltd and Managalore Refinery and Petrochemicals Ltd and fertiliser plants.

GAIL is also working on implementing a national gas grid that is aimed at connecting the under-served eastern part of the country to the rest of the nation.

“We are trying to implement a large portion of the gas grid by 2022/23. The 4,000 kilometres (2,500 miles) which GAIL is implementing today should be ready by December 2022,” Tripathi said. (Reporting by Promit Mukherjee and Nidhi Verma; Editing by Vyas Mohan and Tom Hogue)

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