GAIL (India) Ltd will skip medium-term liquefied natural gas (LNG) deals for 2018 as it starts getting supplies from its U.S. portfolio from February, its head of finance said.
"... We used to buy every year one medium-term contract to cater to domestic demand. This year, we are not doing it. So we will be catching that volume from U.S. volumes," Subir Purkayastha told an analyst conference call last week, according to a transcript made available to Reuters on Tuesday.
GAIL, India`s biggest natural gas transmission and marketing company, has signed contracts for sourcing up to 5.8 million tonnes of LNG from the United States.
The company is also likely to cut its spot purchases once volumes from the United States begin, Purkayastha said, adding that in 2018 GAIL expects to obtain close to 80 cargoes from the United States.
The company currently sells close to 35 million cubic metres per day (mcmd) of super-cooled gas, of which close to 17 mcmd is procured through medium-term and spot purchases.
India wants to raise the share of natural gas in its energy mix to 15 percent in the next few years from about 6.5 percent now. But price-sensitive customers in the South Asian nation forced renegotiation of the price of two long-term LNG deals.
Pricing of U.S. LNG is linked to a formula but other charges including freight to India add an extra $2-$3 per million British thermal units, leading to GAIL scouting for destination, time and volume swap deals.
Purkayastha said GAIL has swapped about 30 percent of its U.S. volumes through destination swaps. The company has kept some U.S. volumes for trading, while selling some through time-swap and direct sales in international markets.
"So for 2018, we are now quite comfortable," he said.
In March, GAIL India signed its first time-swap deal with Swiss trader Gunvor to sell some of its U.S. LNG. It has also sold some of the U.S. volume to Shell
India`s gas demand could rise by about 10 percent in 2018/19 from about 140 mcmd now as the country expands capacity of power generation and fertiliser production.
India`s oil minister Dharmedra Pradhan asked state-run companies on Tuesday to boost supply of gas and alternate fuels in the states where use of petcoke and furnace oil is banned to cut emissions.
Gas demand in the country will further rise when three new fertiliser plants begin operating in 2020/21 and that would help absorb some of the U.S. LNG, Purkayastha said.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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