India looks to US, UAE, Saudi Arabia for gas supply

India may neither pursue arbitration against Russia's Gazprom nor accept compensation from it for reneging on the gas contract with GAIL. 
India may neither pursue arbitration against Russia's Gazprom nor accept compensation from it for reneging on the gas contract with GAIL. 


  • Gas comprises just 6.2% of India’s energy mix, far less than the global average of 24%. The Centre plans to increase this to 15% by 2030.

NEW DELHI : India has reached out to the US, UAE, Saudi Arabia, and Iraq at a government-to-government (G2G) level to secure additional liquefied natural gas (LNG) cargoes at affordable prices, two officials said.

The attempt follows state-run GAIL (India) Ltd recently purchasing spot LNG at over $40 per million British thermal units (mBtu) amid high global LNG prices. GAIL had to make costly spot purchases after a contract was reneged on by Gazprom’s former subsidiary, Gazprom Marketing and Trading Singapore (GMTS).

“We are looking for additional cargoes from other countries, wherever possible. As of now, the availability of gas is not an issue; only the price is. Today, gas is available everywhere, including in the UAE and US. We are trying to negotiate to get a good deal wherein we are able to get gas at an affordable price. We are looking at Saudi Arabia, the US, UAE and Iraq. We have reached out to these countries about our needs," said one of the two officials cited above, both of whom spoke on the condition of anonymity.

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India is particularly disadvantaged as increasing global prices can raise import bills, stoke inflation and widen its trade deficit. India depends on imports for as much as 85% of its oil needs and 55% of its natural gas demand.

A US embassy spokesperson in New Delhi in an emailed response said that the US supports efforts to diversify LNG supplies in alignment with climate objectives and reducing demand for natural gas, adding the US is on track to becoming the largest exporter of LNG this year.

“US LNG exports are up more than 20% since October 2021, and the Energy Information Administration forecasts US LNG exports to increase another 14% by the end of this year," the spokesperson said in an emailed response.

Queries emailed to the spokespersons for India’s ministries of external affairs, petroleum and natural gas, and embassies of the UAE, Saudi Arabia, and Iraq in New Delhi on 20 September remained unanswered till press time. An external spokesperson for the UAE government sought time till 30 September for the UAE trade minister’s response.

“Spot purchases are coming from the US, Qatar and Australia. We are looking at diversifying sources and also looking at getting into long-term contracts. National gas companies are working with different players. We are trying to get supplies from wherever possible at best-suited prices," the second Indian government official cited above said.

The G2G outreach also comes at a time when India may neither pursue arbitration against Gazprom nor accept compensation from the world’s largest explorer of natural gas for reneging on the contract, with the vexed issue being dealt with bilaterally at the highest level of the Indian government. GMTS had inked an agreement with GAIL for 2.5 million tonnes of LNG supply per annum for 20 years, starting in 2018-19. While the Russian long-term LNG cargo started arriving in India in June 2018, the supplies have been stalled since May in the wake of the Ukraine war.

“The costs of President Putin’s full-scale war on Ukraine continue to climb. As National Security Advisor Jake Sullivan stated in a September 20 press briefing, the United States very much welcomed Prime Minister Narendra Modi’s remarks to President Putin at last week’s SCO Summit, as well as efforts by India’s leadership to continue to reinforce the message that now is the time for the war to end," the US Embassy spokesperson said.

India’s natural gas consumption has been on an upswing with a focus on developing a gas-based economy, with the country consuming 163.06 million standard cu. m per day (mscmd) in FY22. Gas comprises 6.2% of India’s primary energy mix, far behind the global average of 24%. However, the government plans to increase this share to 15% by 2030.

India’s diversification efforts for energy sourcing have gained traction, with state-run Indian Oil Corporation Ltd. inking long-term crude oil supply contracts with Brazil’s Petroleo Brasileiro SA (Petrobras) and Colombia’s state-run Ecopetrol SA, respectively.

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