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GAIL plans to expand LNG trading business to global markets
India’s top gas marketer GAIL aims to become a global liquefied natural gas (LNG) trader as the expanding market fuels new business opportunities.
“We plan to ramp up our LNG trading business. We began with sourcing LNG cargoes for ourselves and have expanded to sourcing cargoes for some other Indian companies. Now we plan to serve non-Indian customers as well, with an aim to become a global LNG trader,” GAIL chairman and managing director Sandeep Kumar Gupta told ET.
“The global trade can significantly boost our topline and provide visibility to our Singapore subsidiary,” said Gupta who has set the ambition to turn GAIL into a “company of global standing”. The Singapore subsidiary is engaged in sourcing spot LNG.
GAIL plans to double its LNG trading volume by 2030, Gupta said, without specifying the current size of its business. “We have expertise in gas. We have been procuring from so many geographies. We have sold several US cargoes to multiple customers,” said Gupta.
GAIL has a long-term contract to purchase LNG from the US and sells part of those supplies to international customers, instead of bringing it to India based on arbitrage opportunities. But with a focus on trading now, GAIL would actively seek out buyers and sellers of spot LNG in the global marketplace.
GAIL has long-term contracts for the annual purchase of 14 million tonnes of LNG from various suppliers across the globe, about three-fourths of India’s total long-term buys of about 19 million tonnes. The country’s LNG import from the spot market is small-just about 10%-but growing.
GAIL plans to confine itself to the spot market for its global LNG trade for now, Gupta said. Many established global traders also offer long- and medium-term contracts to buyers and suppliers.
The spot market for LNG has hugely expanded over the last decade with booming supplies, especially from the US and Australia, and diverse customers, mainly from emerging markets. The creation of trading infrastructure has also aided the growth of the spot market, which offers flexibility to buyers and suppliers.
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