Home / Industry / Energy /  Issue of LNG supplies between Gazprom, GAIL will be resolved, talks underway: Puri

Issue of LNG supplies between Gazprom, GAIL will be resolved, talks underway: Puri

Following the default in supplies, GAIL has had to purchase gas at prices as high as $40 per mmBtu, compared with contract prices of $15-17 per mmBtu under the pact signed in 2012.Premium
Following the default in supplies, GAIL has had to purchase gas at prices as high as $40 per mmBtu, compared with contract prices of $15-17 per mmBtu under the pact signed in 2012.

  • With global gas prices rallying, Gazprom stopped supplying to GAIL from May 2022 under their long-term contract as it is getting better prices in the spot market, making GAIL resort to spot purchases

NEW DELHI : Union minister for petroleum and natural gas Hardeep Singh Puri on Wednesday said that discussions on Gazprom’s default on supply of liquified natural gas (LNG) to India’s state-run energy major GAIL and the issue is expected to be resolved.

Speaking to reporters, the minister also noted that India has cordial relations with the countries and entities involved.

“These are discussions going on and we have a very time tested relationship with the countries involved, entities involved. These are the sanctions which they place on their European entities and our contract was with somebody else. It will be resolved, no problem. My expectation is it will be resolved," he said.

Queries sent to GAIL and Gazprom remained unanswered till press time.

The statement comes days after external affairs minister S. Jaishankar’s visit to Russia. On 6 November, Mint reported that the minister is expected to take the issue on the gas supplies during his visit.

With global gas prices rallying, Gazprom stopped supplying to GAIL from May 2022 under their long-term contract as it is getting better prices in the spot market, making GAIL resort to spot purchases. This in turn has tapered supplies to several sectors including fertilizers.

Following the default in supplies, GAIL has had to purchase gas at prices as high as $40 per mmBtu (million British thermal units), compared with contract prices of $15-17 per mmBtu under the pact signed in 2012. Gazprom began supplies in 2018 and it was to reach full volume in 2023. This year, the company Gazprom was to supply at least 36 liquified natural gas cargoes to GAIL. 

The deal was signed by Gazprom Marketing and Trading Singapore (GMTS), on behalf of Gazprom. GMTS was then moved to Gazprom Germania but subsequently, in early April, the company gave up ownership of the German unit without giving a reason and placed parts of it under Russian sanctions.

According to the India deal, GMTS was to supply LNG to GAIL from its production in Russia. However, the sanctions meant that it cannot source LNG from Russia.

On Wednesday, he addressed the World LPG Week 2022 and said that the recent energy crisis has accelerated the energy transition. “We have to transit, equally need to ensure the transition is defined with clear times lines, is realistic and survives change," Puri said.

He further said that LPG can effectively address several Sustainable Development Goals of the UN such as good health wellbeing (Ujjwala Scheme), gender wquality, affordable and clean energy, industry, innovation and infrastructure, climate action.

Puri also said that encouraging innovations in the LPG energy mix, efficiency, conservation, bio LPG, synthetic LPG among others would facilitate favourable shift growth and also help in meeting the climate change goals.

The minister said that prior to launch of PMUY (Pradhan Mantri Ujjwala Yojana), that the availability of clean cooking fuel in the country was a major challenge for rural households in India for many years. Though LPG was the major source of cooking energy in urban India, a large proportion of households still had to depend on biomass such as firewood, dung, crop residue and coal/charcoal for their cooking needs.

He said that the scheme has be benefitted more than 9.55 crore households in India.

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