GAIL considering investing in a US LNG facility

In an effort to diversify supply sources for the essential hydrocarbon resource, the state-run Gas Authority of India (GAIL) is considering acquiring a minority ownership of up to 26% in a liquefied natural gas (LNG) liquefaction plant in the US as well as long-term sourcing agreements. The largest gas utility in the nation issued an expression of interest (EoI) request for the same on Friday. The EoI submission date is March 10. “GAIL is investigating the possibility of acquiring up to 26% equity at par from an existing LNG liquefaction plant or project in the US or upon commissioning of a prospective LNG liquefaction plant or project in the US, which is slated for commissioning at the latest by calendar year.

In addition, the Maharatna company is interested in acquiring 1 million tonnes of LNG annually on a FOB basis from the LNG liquefaction plant/project for 15 years under terms and conditions that can be agreed upon by both parties. On a reciprocal basis, the contract term for LNG delivery may be extended by an additional 5 to 10 years. It further stated that the LNG delivery would start, perhaps, in the final quarter of CY 2026.

The trend is consistent with predictions regarding India’s expanding natural gas consumption. The operationalization of new city gas distribution (CGD) geographical areas (GAs), gas’ pricing advantage over other fuels, and increased use of gas to meet pollution standards are all contributing factors, according to experts, to the rise in gas usage. By 2030, India wants to have a 15% natural gas proportion of the nation’s total energy mix, up from the current 6%. In order to build a national gas grid and boost supply, the government has authorized a network of about 33,764 km of natural gas pipelines across India. Around 22,306 kilometers of pipeline will be in use as of September 2022.

From FY21 and FY22, the gross domestic output of natural gas increased, going from 28,672 million standard cubic metres (MSCM) to 34,024 MSCM. During FY22, India purchased 30,776 MSCM LNG. Currently, the nation has 6 LNG regasification plants that are in service, with a total annual capacity of about 39.2 million tonnes.

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