Corporate Development     

Published: November 15, 2024
Updated: November 15, 2024

GAIL (India)

LNG pact to buffer domestic demand

GAIL, a ‘Maharatna’ Central PSE, recently signed a 10- year sales and purchase agreement (SPA) with ADNOC Gas for the delivery of up to 0.52 million metric tons per annum (mmtpa) of liquified natural gas (LNG), starting in 2026. This is the first SPA of ADNOC Gas with an Indian buyer.

The LNG will be delivered in six cargoes per year from ADNOC Gas’ Das Island natural gas facility, which has an LNG processing capacity of 6.0 mmtpa. It is the third longest established LNG plant still in production globally.

Mr Kumar, Director (Marketing), GAIL, said, “India is witnessing a growing demand for LNG to meet its increasing natural gas demand in a diversified sectoral pattern. GAIL plans to significantly increase its term LNG portfolio in the coming years to meet this rising demand. This SPA with ADNOC Gas is a crucial step in this direction, enabling GAIL to augment its existing LNG portfolio to better serve its diverse consumer base.”

GLOBAL PROVIDER

Rashid Khalfan al Mazrouei, ADNOC Gas Senior Vice President, Marketing, said, “This agreement strengthens ADNOC Gas’ role as a reliable and responsible global natural gas provider and reflects our ambition to capture future growth opportunities in gas demand. It also reinforces our position as a preferred partner for energy solutions in India.” He added, “Global LNG demand is expected to rise by 15% over the next decade, driven by industrial coal-to-gas switching in China and the increased use of LNG for power generation across Southern and Southeast Asia. We are committed to more than doubling our LNG production capacity as part of our strategy to capture a larger share of the growing global demand for lower carbon intensity products like ours.” In 2023, India ranked as the fourth largest importer of LNG globally, with expectations for further growth in LNG imports over the next decade. India aims to increase the share of natural gas in the country’s total primary energy mix to 15 per cent by 2030, from about 6 per cent today. India’s LNG regasification infrastructure has also enhanced to nearly double the capacity last year, rising from 21 mmtpa in 2014.

OTHER SUPPLIERS

Recognising the importance of ensuring supply security as a leading natural gas player, GAIL has already signed a 10-year supply agreement for 1 mmtpa LNG from Vitol Asia Pte Ltd of Singapore, starting in 2026. Additionally, the company’s volume of 4.5 mpta is now renewed under an LNG SPA signed between Qatar Energy LNG and PLL, with supplies commencing in 2028 for a period of 20 years.

GAIL has also successfully onboarded and chartered the long-term LNG vessel, ‘GAIL Urja’, and has entered into a 14-year time charter party agreement for a newly built LNG carrier, to begin in early 2025. With this, the company’s five LNG carriers will enable meeting the requirement of transporting contracted LNG volumes to India.

The company has successfully commissioned India’s first two small-scale LNG skids (containers) showcasing the potential of SSLNG technology in connecting isolated sources and consumers to the natural gas supply chain. SSLNG is envisioned as playing a pivotal role in fuelling LNG use in transportation, mining, city gas distribution and other sectors.

FINANCIALS CLIMB

The company has reported revenue from operations of Rs 66,622 crore for April-September 2024 as compared to Rs 64,050 crore in the corresponding previous period. Profit before tax (PBT) for H1FY25 stood at Rs 7,095 crore as compared to Rs 5,019 crore for the corresponding previous period. Profit after tax (PAT) stood at Rs 5,396 crore in H1FY25 as compared to Rs 3,817 crore in the corresponding previous period. GAIL has witnessed its highest-ever half-yearly EBITDA, PBT and PAT in H1FY25. The natural gas transmission volume stood at 130.63 mmscmd in Q2FY25 and the gas marketing volume was 96.60 mmscmd in Q2FY25. LHC and Polymer sales stood at 253 tmt and 226 tmt respectively in Q2FY25 as compared to 218 tmt and 169 tmt respectively in Q1FY25. In Q2FY25, the Petrochemical segment clocked a PBT of Rs 157 crore as against a loss of Rs 42 crore in Q1FY25. Sandeep Kumar Gupta, CMD, noted that the Petrochemical segment is expected to be reasonably profitable in FY25. On a consolidated basis, revenue from operations stood at Rs 68,803 crore in H1FY25 as against Rs 65,898 crore during H1FY24. PBT in H1FY25 stood at Rs 7,583 crore as against Rs 5,421 crore in H1FY24. PAT (excluding non-controlling interest) was Rs 5,876 crore in H1FY25 as against Rs 4,236 crore in H1FY24. The company has incurred a capex of Rs 1,885 crore during the current quarter, mainly on pipelines and petrochemicals, taking the cumulative capex in H1FY25 to Rs 3,544 crore.

NEW PIPELINES

It is worth mentioning that GAIL has an existing network of 16,271 km of natural gas pipelines and is actively working on laying approximately 3,400 km of new natural gas pipelines across the country.