To source natural gas for meeting domestic demand, GAIL (India) Ltd opened a liquefied natural gas (LNG) trading desk in Singapore on Wednesday. The company would be operating in Singapore through its subsidiary, GAIL Global (Singapore) Pte Ltd.
GAIL will get first cargo from this desk within this financial year, sources said. India's natural gas production is currently at about 120 mmscmd as compared to the demand of around 189 mmscmd. The country is already importing 46.3 mmscmd gas as LNG. Even after these imports, the total availability of 164 mmscmd is short of the current demand of 189 mmscmd.
Mr B.C. Tripathi, Chairman and Managing Director, GAIL said, “the primary purpose of the trading desk is to source natural gas for the Indian market and trading in LNG, petrochemicals and related products.”
The company would undertake purchase and sale of LNG cargoes on spot and short-term basis for trading. So far, GAIL, through the Singapore arm, has made investments in China, Egypt and other countries and would be pursuing opportunities for further investment in different countries.
“Singapore, an ideal geographical location, between LNG demand centres in North East Asia, particularly in Japan, South Korea, China and India as well as LNG supply sources in South East Asia, West Asia and Australia, offers a good locational advantage,” Mr Tripathi said.
Scouting for contracts
With the drop in output from Reliance Industries Ltd-operated KG-D6 gas fields, the country's dependence on imported gas has increased. GAIL has been looking for long- and short-term contracts with global suppliers, he said.
While imported gas is available at $8.5/mBtu and $14/mBtu (excluding other levies and taxes), D6 gas is available at $4.2/mBtu (excluding the levies and taxes), in the domestic market.
GAIL transports 118 mmscmd of gas from various sources. Of this, domestically produced gas is 92 mmscmd, including 29 mmscmd from RIL's East Coast fields. The remaining 32 mmscmd is imported gas.
Within India, GAIL owns and operates a network of over 8,700 km of natural gas high pressure trunk pipeline with a capacity to carry 64 billion cubic metre across the country. GAIL is at present implementing over 5,000 km of new pipelines at an estimated investment of nearly $6 billion.
Once commissioned, the capacity is expected to increase to over 110 billion cubic metre, by 2013-14 and would connect markets in Southern and Eastern parts of India. GAIL would be looking for importing gas for its proposed LNG facility on East Coast of India either directly or through its affiliates.
Petrochemicals is the second largest business segment and a major growth driver for GAIL. In order to diversify its petrochemical product portfolio and actively involve in petrochemical trading activities at an international level, GAIL plans to undertake petrochemicals trading from Singapore.