New Delhi : Russian government-owned Gazprom, the world’s largest explorer of natural gas, has bilaterally declared its failure to honor the terms of a deal for the supply of liquefied natural gas (LNG) to state-run GAIL (India) Ltd. level is being dealt with. At the Indian government level, two government officials are aware of the said development.
He said on condition of anonymity that India could neither mediate with Gazprom nor accept fines from the company. Instead, bilateral efforts are underway to resolve this complex issue, he said.
Gazprom’s erstwhile subsidiary, Gazprom Marketing and Trading Singapore (GMTS), signed an agreement with GAIL to supply 2.5 million tonnes of LNG per annum for 20 years starting from 2018-19.
While Russian goods started arriving in India from June 2018, supplies have stalled since May this year after the outbreak of the Ukraine war. “It is being taken diplomatically, and it will be sorted out, because at the end of the day, the Russians will have to sell their gas. And this is not being seen only in terms of commercial interest, but India is one of the countries that sided with Russia in the Ukraine conflict,” said one of the officials cited above. “Although it may seem that we Sitting on the fence, we are really with Russia because we have not voted against them on any platform. It is not just a point of view. When the Indian government takes a view, it looks at it through a wider prism. ,
The issue was mired in geopolitics after GMTS was placed under Gazprom Germania GmbH, with Gazprom giving up its ownership without explanation in April and imposing sanctions. At the same time, Germany seized control of Gazprom Germania in April, with Economy Minister Robert Hebeck issuing a statement, saying “the federal government is doing what is necessary to maintain the security of supplies in Germany.” In view of the coming winter, Germany is looking to stockpile gas for domestic heating needs rather than supply it to consumer countries. India is particularly disadvantaged because any increase in global prices could affect its import bill, drive up inflation and widen its trade deficit. India is dependent on imports for 85% of its oil needs and 55% of its natural gas demand.
“The problem arose because the contract is not with Gazprom. It is with the GMTS. There are sanctions against GMTS, and they have declared a force majeure (meaning it did not have to fulfill its contractual obligations). We are telling that Gazprom is the parent company, so they will provide gas. So this diplomatic step is being taken.”
Emailed questions to the spokespersons of GAIL, Gazprom, India’s foreign ministries and ministries of petroleum and natural gas and the Russian Embassy in New Delhi remained unanswered till press time on Friday morning.
“We will not accept punishment. There is no point in mediation. The point is that if you arbitrate, first of all, it is in a foreign forum. And what do we get from it? We don’t want to get into all this. We just need gas. What we are saying right now is please provide us gas from any of your global portfolios.”
“The issue is compounded given that Gazprom’s subsidiary has become a German firm, the Russian government has approved it, with most of the gas coming from that particular portfolio. That’s a technical issue. But we’ll sort it out.”
“While there is a clause for fines, why would we take a penalty, given that our primary interest is to secure gas supplies? So, we are trying to use all kinds of channels to resolve this diplomatically and wherever possible we are looking for additional cargo from other countries. Global availability of gas is not an issue, pricing is an issue.”
utpal.b@livemint.com
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