Given the 21-day lockdown, the two firms may also face issues in lifting the contracted cargoes arriving at ports in the near future and ask foreign suppliers for rescheduling of the shipments.
Following the imposition of a national lockdown since March 22, sales of natural gas by Petronet LNG and Gail India have dropped by 20-25 million metric standard cubic meter per day (mmscmd) or around 25%, as consumption across power, fertiliser, refineries, and city gas distribution (CGD) sectors have fallen substantially.
Given the 21-day lockdown, the two firms may also face issues in lifting the contracted cargoes arriving at ports in the near future and ask foreign suppliers for rescheduling of the shipments. The companies have already issued force majeure notices to their suppliers, which may allow them to renegotiate the scheduling of cargoes over the coming weeks and months.
Petronet LNG managing director & CEO, Prabhat Singh told FE, “As per the relevant clause in the contracts we have issued force majeure notices to our suppliers following the complete lockdown situation in the country. We will discuss with our suppliers in coming days on how to go about rescheduling of the cargoes.”
Petronet LNG imports around 250 cargoes in a year and plans to import around 260-270 cargoes in FY21. Petronet’s around 144 cargoes or 9 million tonne of LNG is tied on long term contract, while the balance is sourced from the spot market.
“Given the current situation we may have to reschedule some of the cargoes in the short term depending on the offtake from our clients,” Singh said. Gail India has also issued force majeure notices to its suppliers after it received such notices from its customers in the CGD, steel, glass, ceramics and power sector, a senior Gail India official told FE.
While, Petronet LNG saw its natural gas sales drop to 140 mmscmd from 160 mmscmd, GAIL India’s supplies dropped to between 72-78 mmscmd from 98 mmscmd before the lock down. Of the 160 mmscm that Petronet LNG supplies per day, fertiliser units consume 44 mmscmd, power companies consume 30 mmscmd, CGD consumes another 29 mmscmd, refineries 20 mmscmd, and petrochemicals consume 10 mmscmd, while miscellaneous consumes the rest.
A senior Gail India official said there is drop in consumption of power as the industrial demand has dropped. Similarly, the offtake of fertiliser has also slowed down creating problems of storage.