GAIL India to Cut LNG Purchase from Qatar by 35%

GAIL (India) will cut long term LNG purchase from Qatar by 35 percent, Business Standard newspaper reported Friday.

"We are discussing this issue in terms of the options that we have of downward flexibility of 10 per cent built in to the contract. We are reducing the offtake by another 10-20 per cent," GAIL chairman B C Tripathi told analysts in Mumbai.

The company has been under stress as it has found no takers for the expensive LNG purchased through long term contract. Spot prices currently are lower than the price GAIL is paying under the long term contract.

"Petrochemical plant is consuming regasified LNG as of now. We have decided that it will use spot gas from next month. We have signed a term deal for six cargoes of spot gas from a major supplier. This will help reduce input costs," Business Standard quoted Tripathi as saying.

The 7.5 million tonne LNG from Rasgas procured by Petronet LNG (of which GAIL is liable to take 60 per cent) on take-or-pay basis is expensive at $13 per mBtu. Spot gas on the other hand is available at $8 per mBtu.