India’s largest gas distributor is open to buying Russian oil and gas assets despite western sanctions if the deal made commercial sense, the company’s chairman has said.
GAIL has a long-term gas import deal with Gazprom Marketing & Trading Singapore, part of the Russian energy giant, to buy an average 2.5 million tonnes of liquefied natural gas (LNG) per year.
Under the deal, Gazprom is progressively increasing supplies to GAIL, and shipped 2 million tonnes of LNG in 2021.
Supplies would rise to 2.5 million tonnes in 2022 and 2.85 million tonnes in 2023, a company official said on the sidelines of the conference.
Gazprom has informed GAIL that it was facing issues in procuring gas and has asked to reschedule a liquified natural gas (LNG) cargo, Jain said, adding that the Russian company could supply the committed volumes from its portfolio of assets.
“Why would anyone say no (to Russian assets) if it makes commercial sense,” chairman Manoj Jain said.
He said GAIL is scouting for a 10-year deal to annually import 1 million tonnes of LNG.
Oil and Gas Demand
New Delhi has tried to balance its ties with Russia and the West but unlike other members of the Quad countries – the US, Japan and Australia – it has not imposed sanctions on Russia.
GAIL said it had to address surging local demand for oil and gas, including striking long-term LNG import deals with global companies.
Natural gas buyers in Asia are seeking to lock in supplies via long-term contracts as a buffer against volatile global prices, in moves that will reverse the past decade’s trend of increasing spot purchases.
European countries and the US have imposed heavy sanctions on Russia since Moscow sent troops into Ukraine on February 24. and the EU has proposed its toughest package of punishments yet, including a ban on crude oil in 6 months.
GAIL’s imports of natural gas could increase 5-6% in this fiscal year to March 2023, Jain said, adding that he expected prices of LNG to be high for the next 12-18 months.
Asian spot LNG prices have fallen about 50% from an all-time high in December, but are up nearly three-fold from levels seen in May 2021 as prices have rallied on tight global supplies.
- Reuters, with additional editing by George Russell