GAIL to Explore US LNG Investment or Long-Term Supply Deals

Following the lifting of the US export ban on new liquefied natural gas (LNG) projects, GAIL India Ltd. intends to acquire a stake in an American LNG facility or secure long-term US LNG supply, according to Chairman Sandeep Kumar Gupta.

"The decision to lift the ban will enhance LNG supply, prompting us to revive our plans for either acquiring a stake or purchasing US LNG under long-term agreements," Gupta told Reuters ahead of India Energy Week.

GAIL will make a decision following a tendering process for long-term LNG procurement. As the world's fourth-largest LNG importer, India seeks to increase the share of natural gas in its energy mix from 6.2% to 15% by 2030. GAIL holds the position of India's largest gas distributor.

GAIL's plans to acquire up to a 26% stake in a US LNG plant were put on hold in 2023 when President Joe Biden temporarily halted approvals for new LNG export projects.

Gupta anticipates a softening of global LNG prices after 2026 as new projects in the US and elsewhere commence operations, boosting supply. Analysts predict ample supply from the US and Qatar later this decade to limit price increases.

The US aims to double its LNG export capacity by the end of the decade, while Qatar plans to expand its liquefaction capacity from 77 million metric tons per year to 142 million by 2027.

Gas consumption in India is projected to surpass 500 million standard cubic meters per day by 2030. Gupta believes that incorporating gas into the goods and services tax regime, replacing the current multiple taxation system, will significantly increase consumption by reducing costs and standardizing prices nationwide.

GAIL has contracted to purchase 15.5 million tons per year of LNG from sources including the US, Qatar, Australia, Vitol, and Adnoc, as per its 2023-24 annual report. GAIL's long-term agreements with US companies include the purchase of 5.8 million tons per year of LNG from Berkshire Hathaway Energy's Cove Point facility and Cheniere Energy's Sabine Pass site in Louisiana.

In December, sources reported that GAIL had awarded a five-year tender to Qatar for the purchase of one LNG cargo per month starting in April.