New Delhi: State-owned GAIL (India) has received five proposals for equity stakes in US LNG projects, each linked with offers for long-term LNG supply contracts, top company officials said on Tuesday.
GAIL last month floated a tender seeking up to 26 per cent stake in a US LNG project, bundled with a 15-year LNG supply contract. “We have received good response from US companies,” GAIL Director (Business Development) Rajeev Kumar Singhal said at a company press conference. The offers, he said, were under evaluation. “There are five respondents.” He did not share further details.
GAIL floated the tender just as India negotiated a broader agreement with the US following President Donald Trump’s newly imposed tariffs.
The tender is a revival of a similar process kicked off by GAIL during the previous Biden administration in the US. That was stalled when then-president Joe Biden put a freeze on new LNG export permits for projects at the start of 2024. In the last month’s tender, GAIL sought for offers on a stake in a US liquefiation project that would be commissioned by 2030 at the latest. It also wants to buy 1 million tonnes per annum of LNG from a US liquefaction plant on a free-on-board basis over a firm 15-year period with the option to extend this by five or 10 years. It is eyeing shipments to start in the 2029-30 period.
Bids closed on April 28.
GAIL Chairman and Managing Director Sandeep Kumar Gupta said the company’s latest tender should not be linked to any other negotiations and it was simply revival of the 2023 tender. “At the country level, we have great appetite for US LNG,” he said.
India’s domestic production of natural gas, which is used to produce electricity in power plants, make fertiliser and turned into CNG to run automobiles and piped to household kitchens for cooking, meets only half of its needs. The rest is imported in its LNG.
India is the world’s fourth-largest buyer of LNG, with Qatar currently its largest supplier.
“At the (US gas benchmark) Henry Hub price of $3.5-4 (per million British thermal unit), it makes good sense to import US LNG,” Gupta said. “We believe there is great potential in increasing US LNG volumes.”
While LNG from the US is linked to Henry Hub prices, imports from other places like Qatar is benchmarked to crude oil prices. However, LNG linked to Henry Hub price of more than $4 per mmBtu would not compare favourably with gas indexed to Brent crude oil prices that averages $60-65 per barrel, he said.
Gupta said India’s gas demand is rising 6-8 per cent per annum. GAIL, he said, will operate its 5 million tonnes a year LNG import terminal at Dabhol in Maharashtra during the monsoon season for the first time. This after a breakwater facility that guards ships against high swells in the sea, was constructed.
GAIL typically shuts the terminal for four months from May 25 every year during monsoon.
The new breakwater will now enable ship arrivals during monsoon. “Our breakwater has been completed. We have applied for an all-weather terminal status with the authorities,” Gupta said.