The talks come even as New Delhi looks at spot purchases of LNG to meet domestic demand and fill the supply gap created by Russian energy giant Gazprom’s default of its contract with state-run gas distributor Gail (India) Ltd.
“Talks are underway for long-term contracts for LNG as in the case of crude oil," said one of the two officials mentioned above. The latest move underscores India’s continuing efforts to diversify its import sources for crude oil with state-run Indian Oil Corporation Ltd recently signing long-term crude supply contracts with Brazil’s Petroleo Brasileiro SA (Petrobras) and Colombia’s Ecopetrol SA.
The official, however, added that globally, there is a reluctance to enter into long-term contracts in the current scenario given the prevailing high prices in the spot market.
India has also sought expedited production at the 12.88-million-tonne-per-annum (mtpa) Mozambique LNG project where public sector undertakings, BPCL, ONGC and Indian Oil have a combined stake of 30%. The project operated by TotalEnergies is under force majeure and all project personnel had to be withdrawn from the site after an attack by Islamist militants in March 2021 in the Cabo Delgado province of Mozambique.
At BPCL’s annual general meeting in August, CMD Arun Kumar Singh told shareholders that with the efforts of Mozambican forces, the security situation is improving in the region, and that the project will resume once the situation stabilizes in a sustainable manner.
“Our project in Mozambique, though, it’s under force majeure, the moment it comes up it will be a major source of LNG for India," the second official said.
Queries sent to the petroleum ministry, ministry of external affairs, the embassies of Angola and Algeria in New Delhi, BPCL, ONGC, IndianOil and TotalEnergies remained unanswered at press time.
Traditionally, India imports most of its LNG from Qatar, the UAE, US and Oman, among others, with Qatar supplying the highest volume, worth $3.52 billion so far in FY23.
Although a supplier of LNG to India, Angola is not a major source of gas so far. In FY23 (April-August), India has imported $204.05 million worth of LNG from the southern African country, nearly 30% more than the year earlier.
According to India’s commerce ministry, Algeria supplied LNG worth $61.03 million in August.
India’s total LNG imports this fiscal, as of August stood at $8.24 billion, 82.46% more compared to imports worth $4.51 billion in the same period last fiscal.
The talks for long-term contracts complement India’s efforts to secure additional LNG cargoes from the spot markets globally. On 29 September, Mint reported that India has reached out to the US, UAE, Saudi Arabia and Iraq at a government-to-government level to secure additional LNG cargoes at an affordable price.
The efforts on both the fronts — spot purchase and long-term contracts — follow Gail’s purchase of spot LNG at more than $40 per million British thermal units (mBtu) last month. Gail had to resort to costly spot purchases after its contract was defaulted by Gazprom Marketing and Trading Singapore (GMTS), a former unit of Gazprom.
India imports around half its LNG needs and its diversification strategy is in anticipation of a likely scramble for gas by European nations ahead of the onset of winter. The supply crunch comes at a time when India’s natural gas consumption is on the rise with government’s plans to focus on developing a gas-based economy. In FY22, India’s total consumption of gas stood at 163.06 million standard cu. m per day (mscmd).
