GAIL India Ltd. is looking to buy a stake in a US liquefied natural gas (LNG) plant or secure long-term US LNG supply, as per Chairman Sandeep Kumar Gupta.
The move comes after the Trump administration lifted a ban on export permits for new LNG projects.
Gupta told news agency Reuters ahead of the India Energy Week:
Their (Washington’s) decision to lift the ban will improve LNG supply and we will revive our plans to either buy a stake or buy U.S. LNG under long-term deals.
GAIL, India’s top gas distributor, will decide on holding a tendering process for long-term LNG purchases, according to Gupta.
India is the world’s fourth largest LNG importer and aims to raise the share of gas in the country’s energy mix to 15% by 2030 from 6.2% currently.
GAIL’s 2023 plan to acquire up to 26% stake in a US LNG plant was halted after then-President Joe Biden decided to pause approvals for pending and future applications to export LNG from new projects.
Weak LNG prices beyond 2026
Gupta believes that the global LNG market will experience a softening of prices beyond 2026.
This projection is based on the anticipated influx of new LNG projects that are slated to commence production in the US and other regions around the world.
The increased output from these projects is expected to bolster the overall supply of LNG, thereby easing the upward pressure on prices.
Asia spot LNG prices reached their highest point in two months last week, nearing $15 per million British thermal units.
This increase was influenced by a similar rise in European gas prices.
Despite the current price surge, analysts predict that a plentiful supply of LNG from the US and Qatar, expected to become available later in this decade, will likely put a limit on future price increases.
US LNG capacity expansions
The US is projected to nearly double its capacity to export LNG by the end of the 2020s.
This increase in export capacity positions the US to become a major player in the global LNG market. Meanwhile, Qatar, already a leading LNG exporter, has ambitious plans to further solidify its position.
The country intends to significantly expand its liquefaction capacity, increasing it to 142 million metric tons per year by 2027.
This represents a substantial increase from its current capacity of 77 million metric tons per year.
These expansions by both the US and Qatar are expected to have a significant impact on the global LNG market, potentially leading to increased competition, greater supply, and shifts in trade patterns.
India’s gas consumption to rise
Meanwhile, India’s gas consumption is projected to exceed 500 million standard cubic meters per day by 2030, according to a statement made last year by Indian oil minister Hardeep Singh Puri.
The oil ministry’s Petroleum Planning and Analysis Cell reported that India’s gas consumption for the fiscal year 2024 increased approximately 12.5% from the previous fiscal year to about 185 million standard cubic meters per day.
Gupta told Reuters that India’s consumption would increase sharply if the government simplified the gas taxes. By bringing gas into the goods and services tax regime, prices would be cheaper and uniform across the country.
GAIL’s annual report for 2023-24 stated that the company has signed contracts to purchase 15.5 million tonnes per year of LNG. These contracts include suppliers from the US, Qatar, Australia, and traders Vitol and Adnoc.
The company’s long-term agreements in the US include purchasing 5.8 million tonnes per year of LNG, divided between Berkshire Hathaway Energy’s Cove Point facility and Cheniere Energy’s Sabine Pass site in Louisiana.
Qatar was awarded a five-year tender to supply one LNG cargo per month for five years, beginning in April, sources had told Reuters in December.
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