GAIL (India) Ltd, which is the largest gas distributor in India, has announced its interest in acquiring a partial ownership stake of up to 26% in a project or facility that deals with liquefying natural gas (LNG) in the United States. This piece of information has been made public through a document released by the company.
This means that GAIL (India) Ltd is looking to invest in a facility that specializes in converting natural gas into a liquid state, thereby making it easier to transport across large distances. This investment would allow the company to increase its participation in the global market for LNG, which has been growing in recent years.
By acquiring a partial ownership share in an LNG facility in the United States, GAIL (India) Ltd would be able to gain access to new sources of natural gas, which could potentially help to diversify its supply chain and reduce its reliance on traditional sources of gas. Additionally, this move would also enable the company to expand its reach in the United States, which is one of the largest consumers of natural gas in the world.
Last year, GAIL faced issues with the supply of LNG when Gazprom Marketing and Trading (GMTS), a company owned by Russia, was unable to deliver certain LNG shipments due to Western sanctions imposed on Moscow after its military intervention in Ukraine.
According to a document dated February 16, GAIL is currently investigating the possibility of purchasing an ownership stake in a US-based LNG liquefaction plant or project, either directly or through its affiliates. The company is considering both existing plants and those that are in the process of being built.
The document did not disclose the specific amount of funds that GAIL has allocated for a potential deal. However, it did state that the company or its affiliates are interested in procuring 1 million tonnes of LNG per year from the liquefaction plant or project on a free-on-board basis, for a duration of 15 years. The terms and conditions of this arrangement would be agreed upon through mutual negotiation.
The document also mentioned that the duration of the LNG supply contract could be prolonged by 5 or 10 years, based on mutual agreement. Furthermore, it specified that the supply of LNG is expected to begin provisionally in the last quarter of 2026.
The document stated that the deadline for interested companies to submit their proposals to GAIL is March 10.
As per a statement made by GAIL’s head of finance in January, the company is seeking long-term gas import agreements to compensate for the shortage in supply that it experienced earlier. It is currently in discussions with entities such as the Abu Dhabi National Oil Co (ADNOC) and other potential partners to acquire gas for meeting domestic demand.
In 2012, GAIL had entered into a 20-year agreement with GMTS to procure an average of 2.5 million tonnes of LNG annually. However, following the Western sanctions, the parent company of GMTS, Gazprom Germania (now known as Sefe), withdrew from the business in April last year.