Gail eyes stake in assets abroad

The company is interested in assets that are already producing and on the verge of producing, given an attractive proposition, Gupta said in an interview with Mint.

“We always keep looking out for possibilities world over and if there are assets, especially if there are producing assets available or near producing assets available, we will be more than interested to have our stakes in those assets. Several discussions are also going on,” he said.

Gail, which already holds stakes in 10 exploration and production blocks in the country, has participating interest in two blocks — A1 and A3 — in Myanmar and 20% stake in a shale gas joint venture in Eagle Ford Basin, Texas, US. 

The company is part of a consortium in two offshore exploration and production blocks in Myanmar. These blocks produce around 15.33 million metric standard cubic meter per day (mmscmd) of gas which is supplied to China through South East Asia Gas Pipeline Company Ltd in which GAIL is also an equity partner, according to its annual report for FY23.

Primarily a natural gas infrastructure, marketing and trading company, revenues from GAIL’s exploration and production business accounted for about 0.8% of its total revenue from operations in the last financial year. Its operational revenue from its E&P activities stood at ₹1,134 crore, out of the overall revenue from operations at over ₹1.45 trillion.

The development comes at a time when the energy market has witnessed massive volatility in the past two years with a Gazprom arm reneging on its contracted supplies to Gail starting May 2022, for around a year on high spot prices. Gazprom’s former subsidiary, Gazprom Marketing and Trading Singapore (GMTS), had signed an agreement with GAIL to supply 2.5 million tonnes of LNG per annum for 20 years, starting in 2018-19.

Speaking on the supplies from Gazprom under the long-term term contract, Gupta said: “That supply has been fully restored. We are getting full cargoes…supplies under that contract are progressing well.”

The emphasis on more producing assets is in line with the government’s target of increasing the share of gas in India’s energy mix to 15% by 2030 from the current 6%.

He also said that the company would look for more supplies through long-term contracts to ensure a stable price regime and curb the impact of volatility on consumers. “Our long-term contracts are of very high quantity and definitely spot contracts are much smaller. Spot supplies are vulnerable to the price fluctuations. So, basically we, as a buyer of natural gas or our consumers, both of us want a stable price regime to explore that the operations are carried out.”

The CMD also said that discussions are underway with some neighbouring countries to import on their behalf to help them meet their demand.

“There are neighbouring countries with which we are working upon and if there are such requirements that we can finalize the contracts with them, then we can import on their behalf or to satisfy their need we can definitely do that also. Some discussions on those lines are progressing,” he said. Gupta, however, did not name the concerned countries.

Currently, the company has an LNG portfolio of around 14 million metric tonne per annum (MMTPA) sourced from the US, Qatar, Australia, and Russia among others. It recently signed contracts for additional 1.5 mmtpa supplies including a contract of 1 mmtpa with Vital Asia and 0.5 mmtpa with ADNOC Gas starting 2026.

Regarding the requirement for more long-term contracts, Gupta said the company is engaged with various companies depending upon the offers. “We can ramp up this portfolio further. It has to be in phased manner only.”

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Published: 11 Feb 2024, 04:48 PM IST