GAIL says no disruption in Russian LNG supplies due to sanctions

India’s largest gas firm GAIL is getting regular supplies of LNG under a long-term deal with Russia’s Gazprom despite the geopolitical crisis, the firm’s chairman and managing director Manoj Jain said on Friday.

GAIL has a long-term deal to import 2.85 million tonnes per annum of liquefied natural gas (LNG) from a Singapore-based unit of Gazprom.

”There were some disruptions but supplies have been regular,” Jain told reporters here.

Earlier this month, Moscow slapped sanctions on the owner of the Polish part of the Yamal pipeline that carries Russian gas to Europe, as well as the former German unit of the Russian gas producer Gazprom.

Sanctions, aimed at stopping the flow of Russian gas to Europe, have been imposed on Gazprom Germania, and 29 of its subsidiaries in Switzerland, Hungary, Britain, France, Bulgaria, the Benelux region, the United States, Switzerland, Romania and Singapore.

GAIL has a contract with the Singapore unit.

”We learn from media reports that the sanctions have been put in abeyance for 90 days,” Jain said, adding the company was in talks with Gazprom over supplies.

Gazprom Marketing & Trading Singapore, he said, has been supplying LNG regularly under a long-term deal.

There have been minor adjustments such as splitting of shipments and rescheduling one cargo that was supposed to be delivered this month, he said.

”We don’t see any disruption in our supplies under the deal as ours is a portfolio contract, meaning Gazprom can supply gas from anywhere in the world,” he said.

Gazprom is supplying LNG from Russia as well as its global portfolio.

GAIL expects Gazprom to supply about 40 LNG shipments in 2022, and a full contracted volume of 46 cargoes in 2023, under its term deal.

Under the deal, Gazprom is progressively increasing supplies to GAIL. It shipped 2 million tonnes of LNG in 2021 and is to supply 2.5 million tonnes in 2022. The full volume of 2.85 million tonnes is to be reached in 2023.

Jain said his company is scouting for more long-term LNG to meet growing local demand.

”We aren’t looking at short-term contracts as they are costlier. We want 1 million tonnes per annum of long-term supplies to begin with,” he said, adding GAIL was looking at a 10-year deal with supplies starting January 2023.

GAIL expects to import 5-6 percent higher LNG volume in the current 2022-23 fiscal.

Asked about investing in Russian projects, he said GAIL may look at a stake ”if it makes economic sense. However, there is nothing on the table yet.” ”We can look at it provided it has economic value,” he said.

The US and European nations have imposed heavy sanctions on Russia since Moscow sent troops into Ukraine on February 24. Some western oil firms have announced exit from Russian projects and Indian firms are being considered a natural candidate to join in.

India has raised oil imports from Russia after the Ukraine war despite criticism from the west and continues to engage with Moscow for business.

GAIL, Jain said, will bid for buying natural gas from domestic difficult fields and also spot LNG to meet demand from city gas distributors.

It will buy 1 LNG cargo from the spot or current market every 30-40 days to meet city gas demand for now.

It bought one spot cargo for May for city gas and will buy another for next month.

GAIL has been asked by the government to pool locally available natural and imported fuel for supplying to CNG and piped cooking gas operators in the country.

The company will invest Rs 30,000 crore in the next three years on pipelines, petrochemicals, and other projects, he added.