GAIL to buy 1 mn tonne LNG annually for 10 years from Dutch firm Vitol

New Delhi: India's biggest gas firm GAIL on Friday said it has signed a deal to buy about 1 million tonne per annum of LNG from Dutch energy trader Vitol for 10 years starting 2026.

"Under this deal, Vitol will deliver liquefied natural gas (LNG) from its global LNG portfolio to GAIL in India on a pan-India basis," the company said in a statement.

LNG is natural gas, extracted from below surface, that has been cooled down to liquid form for ease and safety of non-pressurised storage or transport.

GAIL will import LNG in cryogenic ships and turn it back into its gaseous state before piping it to users that may include power plants for generating electricity, fertilizer units for producing crop nutrients or city gas operators for selling to automobiles as CNG or piping to household kitchens for cooking.

The company said it and Vitol Asia Pte Ltd have signed a long-term LNG deal but did not give pricing and other commercial details.

"This long-term LNG deal with Vitol will augment GAIL's large LNG portfolio and will contribute to bridging India's demand and supply gap for natural gas," GAIL chairman and managing director Sandeep Kumar Gupta said.

India imports roughly half of its gas needs as local production is insufficient to meet demand.

Vitol CEO Russell Hardy said, "We are pleased to build on the existing relationship between Vitol and GAIL and to conclude this long-term LNG supply deal together. India is a significant and growing LNG market and we are excited to bring LNG supply from our global LNG portfolio to meet this rising natural gas demand."

Commenting on the signing of the deal in Singapore, GAIL director (marketing) Sanjay Kumar said the company is doing this deal as demand for natural gas in India is getting consolidated and this tie-up is part of the multiple negotiations which GAIL has been carrying on with various LNG suppliers for long-term deals.

GAIL, which has an LNG portfolio of around 14 million tonnes per annum comprising supplies from countries, including the US, Australia and Russia, has been scouting the market for long-term LNG supplies to meet the growing gas demand in India.

It had previously been in talks with Abu Dhabi National Oil Co (ADNOC), Russian LNG producer Novatek and Qatar, among others to source gas.

The firm operates a 5 million tonnes a year LNG import facility at Dabhol in Maharashtra and has leased space at terminals in Gujarat and Odisha. It is scouting for a 26 per cent stake in a US-based LNG plant to source 1 million tonnes a year of LNG for 15 years.

These volumes were to make up for a shortfall in supplies in a Russian contract as well as to meet increased demand.

In 2012, GAIL signed a 20-year deal with GMTS to buy an annual average of 2.5 million tonnes of LNG. GMTS was a unit of Gazprom Germania, now called Sefe. The Russian parent gave up ownership of Sefe after Western sanctions over Russia's invasion of Ukraine.

Sefe halted supply to GAIL in May 2022 and resumed only a year later.