The Financial Express: Expensive LNG via Long-Term Deal a Major Concern for GAIL

GAIL (India), the country’s largest gas transmission and marketing company, is under stress as liquified natural gas (LNG) procured via long-term contract has turned out to be expensive than spot buys with no takers for the gas. Left with no option, the PSU has to utilise the expensive gas for its own petrochemical plant leading to fall in margins. With the scenario not expected to change any time soon, GAIL’s longer-term growth trajectory is also under cloud, feel analysts.

According to GAIL, the dramatic fall in global oil prices over the past few months has affected the oil and gas industry worldover and it is no exception. “As LNG prices are linked to oil prices, the spot prices have also reduced drastically, and this is definitely a major challenge for GAIL because we import most of our LNG through long term contracts which are costlier at the moment,” the company spokesperson said in response to FE queries. MORE