India in talks with Angola and Algeria for LNG supply

India is in talks with Angola and Algeria to procure liquefied natural gas (LNG) under long-term contracts, two development-aware officials have said, amid concerns of a global shortage of gas fueled by the Ukrainian crisis.

The talks come even as New Delhi considers LNG spot purchases to meet domestic demand and bridge the supply gap created by Russian energy giant Gazprom’s breach of its contract with state gas distributor Gail. (India) Ltd.

“Discussions 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 decision underscores India’s continued efforts to diversify its crude oil import sources with Indian Oil Corporation Ltd recently signing long-term crude oil supply contracts with Brazil’s Petroleo Brasileiro SA (Petrobras) and the Colombian Ecopetrol SA.

The official added, however, 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 to ramp up production from the 12.88 million tonnes per annum (mtpa) Mozambique LNG project where public sector companies BPCL, ONGC and Indian Oil hold a combined 30% stake. The project operated by TotalEnergies is in force majeure and all project personnel had to be removed 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 the project will resume once the situation improves. stabilize permanently.

“Our project in Mozambique, however, is in force majeure, as soon as it comes it will be a major source of LNG for India,” the second official said.

Queries sent to the Ministry of Petroleum, Ministry of Foreign Affairs, Angolan and Algerian Embassies in New Delhi, BPCL, ONGC, IndianOil and TotalEnergies remained unanswered at press time.

Traditionally, India imports most of its LNG from Qatar, the United Arab Emirates, the United States and Oman, among others, with Qatar supplying the highest volume, worth 3.52 billion. dollars to date for fiscal year 23.

Although a supplier of LNG to India, Angola is not a major source of gas so far. In FY23 (April-August), India imported $204.05 million worth of LNG from the Southern African country, almost 30% more than the previous year.

According to India’s Ministry of Commerce, Algeria supplied LNG worth $61.03 million in August.

India’s total LNG imports this fiscal year in August were $8.24 billion, 82.46% higher than imports worth $4.51 billion during the same period of the previous year.

The talks for long-term contracts complement India’s efforts to secure additional LNG cargoes in spot markets globally. On September 29, Mint announced that India had approached the United States, United Arab Emirates, Saudi Arabia and Iraq at government level to secure additional LNG shipments at an affordable price.

The efforts on both fronts – spot buying and long-term contracts – follow Gail’s purchase of spot LNG at over $40 per million British thermal units (mBtu) last month. Gail had to resort to expensive cash purchases after her contract was terminated by Gazprom Marketing and Trading Singapore (GMTS), a former unit of Gazprom.

India imports about half of its LNG needs and its diversification strategy anticipates a probable gas rush by European countries before the onset of winter. The supply shortage comes at a time when India’s natural gas consumption is on the rise with government plans to focus on developing a gas-based economy. In FY22, India’s total gas consumption was 163.06 million standard cubic. m per day (mscmd).

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