GAIL seeks gas from East Africa to boost supply chain

Written by Press Trust of India | Singapore | Updated: Feb 27 2014, 09:38am hrs
GAIL (India) is seeking liquefied natural gas (LNG) from East African producers to diversify its supply sources, a senior company official said on Wednesday.

"We are trying to spread our portfolio of LNG supplies geographically and indices wise (and) we are looking at the East African suppliers, company's marketing director Prabhat Singh said. He stressed the new supplies were being sought at prices of around $12 per million British thermal units which would be good for the Indian market.

"At this point in time, a price of $12 per mmbtu would be good for India," said Singh, who told the conference that LNG price was a major issue for the Indian market.

So far, GAIL has the best price contract with US-based LNG suppliers, which was at less than $12 per mmbtu on Free on Board basis. The 6 million tonnes per annum(mtpa) supply from US was expected to commence from 2018.

Currently, GAIL gets 7.5 mtpa from the West Asian suppliers. It has also firmed two contracts for 2.5 mtpa supplies by Gazprom for Russian LNG from 2018-19 and 1.5 mtpa supplies from Australia's Gorgon project, starting 2015.

"We have a balanced portfolio," said Singh, pointing to the flexibility of supplies from diversified sources of supplies to manage prices and import costs.

GAIL's contracts are based on the US' Henry Hub, Japan Crude Cocktail and Brent indices. It is now looking for contracts based on North Myrtle Beach (NMB) index, he said.

Meanwhile, Petronet is hoping to commence operation of its 5 mtpa LNG receiving terminal on the Andhra Pradesh coast in 2017, expecting the new eastern state government to give the final of the pending approvals after the elections.

Speaking at the LNG conference, Petronet vice president for finance, Pankaj Wadhwa, said the project had received all other approvals for the Gangavaram terminal. Petronet and Gangavaram Port are to jointly develop the land-based 10 mtpa terminal for the east coast markets.