GAIL (India) Limited has once again been in the thick of things
owing to increased liquefied natural gas (LNG) demand in the
country. Having signed a 20-year terminal service agreement
with the Richmond, Virginia-based Dominion to lift 2.3 million
mt per year of LNG from its Cove Point project, along with
a contract with Cheniere Energy to import 3.5 million mt per
year of LNG from the Sabine Pass terminal in Louisiana, the
company is on the lookout for prospective customers to market
the contracted regassified-LNG (R-LNG). GAIL’s Director
(Marketing), Prabhat Singh talks to Neeraj Dhankher about
the company’s gas marketing plans. Excerpts:
Do you feel there is enough
demand for imported LNG in
India? What are your plans in
We need to move forward as a
business organization. Fertilizer, power
etc is taking time to decide. There is
enough material that can be absorbed
by all these. Indian customers have
committed and we are in the process.
But we still have not gone to the
market. We are now making the
move and trying to tie up all kinds of
options that we have. We now have
a flavor of the demand pattern across
the country. We are now moving into
the market. Just wait for a month or
two and you will hear a lot of options
being signed by us.
How much volume are you
planning to sell from the
US in India?
We plan to sell the entire volume i.e. 6
mmt. There is a huge demand in India.
There is no reason for us to believe
that we will not be able to sell here.
Around 1 mmt will be marketed
through our Singapore
subsidiary. We are
because there is
is coming in. So
we need to think
international. Today the
world reserves are there and we need
to exploit them. How we do that is a
challenge along with how we develop
our competency because we in GAIL
do not have those competencies to
go internationally and trade. We are
working on that at the moment.
But why are Indian companies
slow in warming up to this idea
of taking imported gas?
That is because the policy is still
taking time. Already five fertilizer
plants have been cleared (to buy
R-LNG). That means around 12-13
million cubic metres of gas i.e.
around 3 mmt will be absorbed.
So there is no dearth of demand
in this country. Let us not
misquote and create a situation
that it is not being sold in India.
There is more demand. In two to
three months we will sign a lot of
contracts. We wanted to give this gas
to fertilizer and power sector first.
Out of 6 mmt, how much will
be sold to power and fertilizer
If the policy comes up, all 6 mmt will
be sold to them. Look at the KGD6
gas today. Not even a molecule
is going elsewhere other than these
two sectors. Still, there is dearth of
gas in these sectors.
There have been reports that
GAIL will be excluded from
subsidiary-sharing. How much saving do you expect from that?
That is wishful thinking. We want
it to happen. Whatever we used to
pay as subsidy will be our saving.
Last year we gave around `3,100
crore as subsidy. All that will come
back as a saving.
Please outline your LNG import
plans for the next fiscal.
At this point, we have contracts
already in place for around 1.5 mmt.
We will also be buying around 30-35
cargoes from the spot market which
is nearly 2 mmt. We are trying to
maintain our customers and create
more customers for the gas which
will come in 2017-18 from the
US. Already, RasGas is supplying
7.5 mmt of gas.
What is the update on Dabhol
On 15th January 2014, a cargo was
to be unloaded at Dabhol. Work on
breakwater is in progress. A tender
has been floated and is expected to
be awarded shortly. Only recently,
it has come out of court and is free
from all encumbrances. But there is
no gas for the power plant and we are
fighting another battle of not allowing
it to become a non-performing asset
(NPA) because Dabhol is itself
going through a phase where you
have to pay the lenders. So there
are major issues which are being
talked about and breakwater is one of
them. But we need to survive first to
make the breakwaters.
What capacity is Dabhol LNG
terminal operating at today?
Capacity wise, it is operating at
around more than half i.e. 2 to 2.5
mmt out of 5 mmt.
Petronet LNG, in which GAIL is
a stakeholder, commissioned
the 5 million mt per year Kochi
terminal in August 2012. But the terminal has since been
operating at below 20 per
cent capacity because of low
offtake from its customers and
lack of pipeline connectivity.
What is the update?
Kochi terminal, where we have 30
per cent stake, is operating at nominal
level. Fertilizer major, FACT and
Kochi refinery of BPCL are sourcing gas along with some other small
customers. Around 1 mmt of gas is
being sold now to them.
What are the plans to ramp up
capacity at Kochi LNG terminal?
Phase-I of connectivity has happened
and Phase-II connectivity is still on
as there are issues in Tamil Nadu
over laying of the pipeline. Even in
Kerala there are issues. So efforts are
continuing but it will be ramped up.
It is also important that both FACT
and BPCL ramp up their capacities
to nearly 2.5 to 4 mmt. FACT is
facing some fund issues for its
Apart from the US, what all
markets are you looking
at for LNG?
We are looking at all markets.
Anybody who gives us cheap gas.