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GAIL India signs LNG supply deal with ADNOC

GAIL India on Monday announced that it has signed an agreement to buy 0.5 million tonne per annum of LNG from UAE's ADNOC-Gas, the second supply deal it has stitched this month as part of shoring up supplies to meet energy demands of the country.

''This is pursuant to an MoU dated October 30, 2022, between GAIL and Abu Dhabi National Oil Company (ADNOC)'' wherein the two had addressed to ''explore opportunities, including the purchase of LNG by GAIL from ADNOC for a tenure ranging from short term to medium and long-term'', the company said in a statement.

Under this agreement, the deliveries will commence from 2026 onwards for a duration of 10 years, across India. GAIL did not disclose pricing and other details.

''This arrangement is believed to further aid in India's rising energy security requirements and, simultaneously, also fuel GAIL's strategic growth objectives to cater to its downstream customers in the rapidly evolving natural gas landscape of the country,'' it said. On January 5, GAIL announced the signing of a deal to import 1 million tonnes of liquefied natural gas (LNG) from Dutch energy trader Vitol for 10 years, starting in 2026.

GAIL chairman and managing director Sandeep Kumar Gupta said this long-term LNG deal with ADNOC will contribute to bridging the gap in India's demand and supply of natural gas and will open more avenues of strategic partnership between the two firms in other areas of the energy domain.

Underlining the broader impact of the agreement, GAIL Director (Marketing) Sanjay Kumar said this long-term LNG transaction by GAIL will help India in moving towards the Government of India's objective of enhancing the share of natural gas in India's energy basket to 15 per cent by 2030 from current 6.2 per cent.

Further, this deal will also help GAIL to augment its significantly large LNG portfolio to serve its diverse consumer profile.

India imports roughly half of its gas needs as local production is insufficient to meet demand.

GAIL operates a 5 million tonnes a year LNG import facility at Dabhol in Maharashtra and has leased space at terminals in Gujarat and Odisha. It is scouting for a 26 per cent stake in a US-based LNG plant to source 1 million tonnes-a-year of LNG for 15 years.

These volumes were to make up for a shortfall in supplies in a Russian contract as well as to meet increased demand.

In 2012, GAIL signed a 20-year deal with GMTS to buy an annual average of 2.5 million tonnes of LNG. GMTS was a unit of Gazprom Germania, now called Sefe. The Russian parent gave up ownership of Sefe after Western sanctions over Russia's invasion of Ukraine.

Sefe halted supply to GAIL in May 2022 and resumed only a year later.