GAIL (India) Ltd has announced that it has signed an agreement with Chubu Electric Power Co., Inc., of Japan to explore possibilities for collaboration in the area of joint LNG procurement and shipping optimisation. The two companies are large LNG importers. The collaboration is expected to enhance GAIL’s efforts to source LNG volumes on competitive terms. The MoU was signed during the Gastech Conference held in Seoul, South Korea, recently.
The public sector gas utility’s move is in sync with its recent efforts to establish and promote Asia LNG Forum, a sort of Asian LNG buyers’ club. The company is also working towards establishing a regional gas trading hub for Asia as well as an Asian gas index.
By signing the MoU with Chubu, GAIL also hopes to bridge the gap in demand-supply of natural gas in the Indian market. This is in addition to its other initiatives towards LNG sourcing, creating LNG regasification infrastructure, reserving liquefaction tolling capacity in overseas projects and augmenting transmission capacity significantly over the next few years.
Speaking at the inaugural ministerial session of Gastech on March 23, B.C. Tripathi, Chairman and Managing Director, GAIL (India) Ltd, highlighted the enormous gas demand in Asia and said that in spite of being the largest importer of LNG, the Asian market was paying premium for LNG. Tripathi emphasised the need for developing synergies among Asian countries by promoting cross-border pipelines to bring gas from Central Asia, interlinking Asian countries through gas pipelines and promoting Asian Cooperation Forum to address the issues of Asian Gas Grid and Asian LNG Forum and Asia Hub/Index.
The GAIL CMD also said that in times to come, the Asian market would prefer suppliers who had reliable and diverse source of supply and offered transparent and competitive pricing methodologies. He reiterated that contract with destination flexibilities and innovative pricing including S-curve had become essential as it helped to tap the new demand in Asia by bringing a win-win proposition for both suppliers and buyers.