India’s Gail seeks to add LNG tanker for US project

  • Market: Natural gas
  • 22/02/24

Indian state-controlled gas distributor Gail plans to add an LNG tanker to ship cargoes from the US, two persons with knowledge of the matter told Argus.

Gail is seeking delivery of the tanker between October 2024 and September 2025 for a minimum period of seven years, which can be extended by another two years, a source in a shipping firm said.

The tanker would have a capacity of 159,000m³ to 181,000m³ to transport the fuel from the US. Gail has a term deal for 3.5mn t/yr of LNG from the US' Sabine Pass terminal and 2.3mn t/yr from Cove Point, valid till 2038.

The firm currently has four LNG tankers to bring the super-chilled fuel from the US, which includes two-time charter agreements with Japan's Mitsui O.S.K Lines and the rest with NYK Line.

The new tanker will help Gail bring more US LNG cargoes to the country instead of swapping cargoes. It will also provide more operational flexibility to the firm, keep its downstream consumers adequately supplied and at the same time reduce supply uncertainty stemming from geopolitical conflicts like the continuing Red Sea tensions.

Gail has sold some LNG cargoes sourced from Cheniere Energy's terminal in the Gulf of Mexico to an unnamed highest bidder in Europe, Argus had reported quoting Gail's director of marketing Sanjay Kumar on the sidelines of the India Energy Week in Goa on 9 February.

Gail used the proceeds from the sale to source spot cargoes from Gulf countries — shipments which do not have to transit through the Suez Canal to reach India. The firm is likely to issue more LNG tenders to swap US term cargoes with supplies closer to India as cargoes face difficulty in transiting the Suez Canal, Kumar added.

The conflict in the Red Sea since December 2023 has disrupted shipping operations as tankers heading to India have been taking the longer route around the Cape of Good Hope. An inability to take the shorter Suez Canal route adds up to seven days in delays for Gail's US LNG shipments to reach the 17.5mn t/yr Dahej LNG import terminal on the west coast of India, Kumar said.

Gail offered several LNG cargoes from the Cove Point LNG export terminal in 2017, in order to overcome the problem of a shortage of tankers that could deliver supplies to India.

The swap deal resulted in shorter and more efficient deliveries as the swapped cargo ideally would come from a terminal closer to India as compared to the US, and the Cove Point cargo would go to a destination nearer to the US as compared to India.

But swap tenders from the US have declined because of availability of four LNG tankers to bring cargoes to India.

Gail originally planned to bring all its US cargoes into the country this year, but the conflict in the Red Sea prompted the firm to change tack and issue swap tenders instead, a source with knowledge of the matter said.


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