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India’s Gail plans to raise FY2020 LNG imports by 21% on year to meet fertilizer demand

India’s state-owned gas utility Gail plans to import 75 LNG cargoes — or around five million mt — in the fiscal year ending March 2020, up 21% from 62 cargoes a year earlier, a top company official said, mainly to meet extra demand from the fertilizer sector.

Most of the additional demand — around one million mt — will be destined to meet demand from the expansion of two fertilizer plants, Gail chairman B.C. Tripathi said.

The company plans to source 90% of its LNG requirements through existing long-term contracts with suppliers from the US, Russia and Qatar, with the remaining 10% from the spot market. This is based on an estimated average price of $8-$9/MMBtu for long-term volumes and a $5-$6/MMBtu for spot.

Tripathi said Gail has sold all of its long-term volumes from the US via swap deals up until March 2022. The company has long term LNG contracts with the US to the tune of 5.8 million mt/year, with around 40% of its LNG portfolio indexed to Henry Hub prices.

As LNG imports increase, Gail plans to add 5,500 km to its existing pipeline network by 2022. At present, the average utilization rate for its existing pipeline network spanning 14,000 km stands at 50%.
Source: Platts

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