New Delhi: State gas utility GAIL (India) Ltd will start receiving LNG under a five-year 12 cargoes per year deal from Qatar Energy Trading from next month as it augments sourcing to meet rising demand of the world's fastest growing economy.
"Purchases under the deal will start from April," GAIL chairman and managing director Sandeep Kumar Gupta said.
GAIL had in December last year awarded a liquefied natural gas (LNG) purchase tender for procuring 12 cargoes per year starting in April 2025 for a tenure of five years to Qatar Energy Trading.
Besides the Qatar Energy deal, GAIL has in recent months signed long-term LNG procurement deals with suppliers. It has inked a long-term deal with commodity trader Vitol Asia for around 1 million tonne a year for a period of about 10 years, commencing 2026. Under this deal, Vitol will deliver LNG from its global LNG portfolio to GAIL in India on a pan-India basis.
GAIL has also signed a long-term deal to purchase around 0.5 million tonne a year of LNG from the UAE's ADNOC Gas from 2026 onwards for 10 years across India.
The deals will help in meeting India's rising energy needs and are in line with India's ambition of enhancing the share of natural gas in the energy basket to 15 per cent by 2030 from the current levels of around 6-7 per cent.
Other than GAIL, Indian Oil Corp (IOC) has signed binding heads of agreement deals with Abu Dhabi National Oil Co. LNG and TotalEnergies. IOC's deal with ADNOC LNG is for 14 years for 1.2 million tonne a year and with TotalEnergies for 10 years for 800,000 tonne per year.
Gupta said GAIL is looking at medium and long-term LNG contracts to cater to the increasing downstream demand in India and supply natural gas to various sectors.
He however did not disclose pricing and commercial details of the deal.
The company has an existing LNG portfolio of 14 million tonne per annum which is well diversified among various indexes. Till 2030, GAIL will source additional 7-8 million tonne per annum of LNG through long/mid-term contracts (2.25 million tonne already signed).
It has two long-term agreements to buy a combined 5.8 million tonne of LNG from the US on an FOB basis and a 2.5 million tonne supply contract with Germany's state-owned Securing Energy for Europe GmbH on a DES basis. GAIL's long-term US contracts are linked to Henry Hub while its contract with SEFE is linked to crude oil prices.
GAIL owns and operates a network of over 16,000 km of natural gas pipelines spread across the country and holds a 70 per cent market share in gas transmission and has a gas trading share of over 50 per cent.
Industry sources said the Qatar Energy deal is priced at a slope of 115 per cent to Henry Hub plus a constant of USD 5.66 per million British thermal unit with deliveries on the west coast of India.
Its existing contracts with Sabine Pass and Cove Point in the US are priced at 115 per cent Henry Hub plus a constant of nearly USD 3 per mmBtu.