GAIL is now exploring other options including tying up supplies from other sources in the US and West Asia
GAIL is now exploring other options including tying up supplies from other sources in the US and West Asia
Sources said Russia has defaulted on supplying at least five cargoes or shiploads of LNG to India following retaliatory sanctions to one of the gas supply companies to India.
India’s largest gas firm GAIL has inked a long-term deal to import 2.85 million tonnes of liquefied natural gas (LNG) per annum from the Singapore-based unit of Russian gas producer Gazprom.
Two sources gave information about this matter.
While the contract later provides for making up unsupplied volumes, the Russian firm has so far neither indicated how and when it will make up for lost volumes.
Sources said Gazprom has conveyed to GAIL that it will supply LNG from here on best effort basis.
GAIL is now exploring other options including tying up supplies from other sources in the US and West Asia.
Moscow has imposed sanctions on 31 companies in recent months, including owners of the Polish portion of the Yamal pipeline, which carries Russian gas to Europe, as well as Gazprom’s former German unit.
The move was intended to cut off Russian gas supplies to sanctioned entities, which were largely based in countries that imposed sanctions on Russia in response to the invasion of Ukraine.
Approved companies include Europol Gaz, Gazprom Germania and Gazprom subsidiaries in Austria, Belgium, Bulgaria, Czechia, France, Germany, Italy, Hungary, Poland, Romania, Slovakia, Switzerland, the UK, as well as Polish pipeline owners in the US and Singapore. . ,
GAIL has a contract with Gazprom Marketing & Trading Singapore. But the ownership of this company was reorganized and it was now under Gazprom Germania.
Since the approved entities do not have access or limited access to Russian gas, they are unable to fulfill their commitment to customers, the sources said.
He said GAIL is exploring legal options to enforce the contract.
Previously, Gazprom made small adjustments such as splitting the shipment and rescheduling a cargo that was to be delivered in May. But now it has defaulted in supplying 5 cargoes including two in July.
As part of the deal, Gazprom is progressively increasing supplies to GAIL. It shipped 2 million tonnes of LNG in 2021 and supplied 2.5 million tonnes in 2022. The absolute volume of 2.85 million tonnes is to be reached in 2023.
GAIL expected Gazprom to supply around 40 LNG shipments in 2022, and the full contracted quantity of 46 cargoes in 2023, under its term deal.
Sources said that the Gazprom unit did not provide a definite schedule for the supply of gas during the rest of the year and the situation could possibly be salvaged through diplomatic channels.
The US and European countries have imposed heavy sanctions on Russia after Moscow sent troops to Ukraine on February 24. Some Western oil firms have announced their exit from Russian projects and Indian firms are seen as a natural candidate to join.
India has increased oil imports from Russia after the Ukraine war and continues to engage with Moscow for trade, despite criticism from the West.