Page 13 - GLNG Week 12 2023

GLNG ASIA GLNG

Gazprom LNG supplies to GAIL

India to resume

INDIA A one-time subsidiary of Russian energy giant customers.”
Gazprom is set to resume a long-standing LNG At the time, Russian, then German, managers
Gazprom’s cargoes supply contract to GAIL India. cited a case of force majeure as they ceased the
were disrupted last Now operating under the banner of SEFE monthly supply run to the sub-continent.
May. Marketing & Trading Singapore (SMTS), the As the war dragged on, however, and prices
latest incarnation of the firm has undergone a escalated to all-time record highs, it now appears
number of transformations since being nation- that behind the scenes negotiations were ongo-
alised by the German government to help it rid ing despite the lack of LNG flow.
itself of its links to Gazprom and assumed links “In its annual delivery plan and in their latest
to Russian officials. communications, SMTS, as they are now known,
In an announcement made by Indian Minis- have maintained their alleged force majeure
ter of State, Petroleum & Natural Gas Rameswar stance citing various reasons such as Russian
Teli to the Indian parliament, it was revealed that sanctions on its LNG source and portfolio and
SMTS had “informed us that they shall be able mandate from German authorities for ensuring
to supply two cargoes in March 2023, and two energy security for Europe for their inability to
in April 2023.” deliver LNG cargoes,” Teli added with an obvious
LNG cargoes ran until last May before falling degree of doubt.
victim to the war in Ukraine and anti-Russian The minister went on to stress that the force
feeling around the globe. majeure defence was still a claim SMTS stood
In the months that followed LNG prices sky- behind, even with the recent offer of four cargoes
rocketed, although they have since come back in the coming weeks.
down to near normal prices. At the same time, the firm now claims to be
The previous GAIL agreement, a 20-year using its non-Russian depots as the source from
deal signed in 2012 with the predecessor of which the cargoes offered to GAIL are coming;
SMTS with the similar acronym of GMTS, was a move some see as a bid to circumnavigate
for around 36 cargoes annually, amounting to anti-Russian sanctions. ™
2.5mn tonnes.
No amendments to the conditions of the
contract have been released by either party con-
cerned, leaving buyers in India speculating as to
just how the missing nine months of cargoes will
be made up.
It is known that GAIL late last year refused
compensation from SMTS in a bid to maintain
the Indian firm’s rights over the still undelivered
cargoes.
The compensation offered was understood to
be around 20% of the cost of the LNG at the time.
“We are not accepting the penalty, as this
would give SEFE an exit route from the contrac-
tual obligation. We don’t want to lose our right
to buy the cargoes again,” local Indian media
quoted sources familiar with the case as saying
in November.
It was an issue the minister only alluded
to briefly when he spoke recently, saying: “in
view of limitation in supply of LNG carried out
by GMTS, GAIL had imposed certain supply
regulation on regasified LNG to downstream
customers from mid-July, 2022 to mid-March
2023.
“These regulations were within the contract
executed by GAIL,” he said before continu-
ing: “in order to meet the shortage, GAIL had
sourced spot LNG volumes from the domestic
and international market and also stopped its
petrochemical complex at Pata, Uttar Pradesh
plant, from fulfilling supply obligations to the

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