After having advocated for quite some time the need to jointly procure liquefied natural gas (lNG) from suppliers situated in Middle East and Africa as Asian countries have long felt that they are sold the resource at prices higher than those offered to buyers from other continents, India and Japan are likely to ink a pact later this week to facilitate joint purchase of gas.
GAIl Chairman B C Tripathi told reporters on Wednesday that "we are discussing with them (the possibility of signing an agreement) and shortly we will be able to sign a MoU". The agreement will be for cooperation in natural gas sector including lNG sourcing as well as shipping and supply. "It will be for all-round cooperation,", Tripathi added.
Meanwhile the state-owned entity's net profit grew 30 per cent during the third quarter of the current fiscal at Rs 1679.40 crore over Rs 1,285 crore of the corresponding period. This was mainly owing to a sharp decline in its subsidy burden. The results for the period also included a one-time gain of Rs 344.95 crore on account of profit on sale of long-term investments. Its net sales for the quarter went up by 28 per cent to Rs 15,980.62 crore from Rs 12,474.25 crore of the corresponding period last year.
Both India and Japan had in October 2012 agreed to carry out a joint study to examine ways to mitigate increasing import costs in Asia as well as to maintain stable supplies of lNG to Asia.
In September last year, they agreed to work together towards the development of lNG markets that will enable effective, stable and globally competitive lNG procurement. India, the seventh largest lNG buyer in the world, and Japan, the biggest importer of liquid gas, currently buy the gas separately.
This brings to the market a hugely competing demand, pushing the prices up. New Delhi has been pushing for lNG buyers forming a forum to better negotiate price with suppliers in the Middle East, Africa and Australia. Chubu President Akihisa Mizuno last week said in Tokyo that the Japanese utility aims to sign an agreement with GAIl to launch talks on potential joint purchases of lNG and cooperation in areas such as shipping.
Asian prices are now more than four times the cost of natural gas in the United States. Tripathi said GAIl has tied up 6 million tonne a year of lNG from the US beginning 2017-2018 and the company is planning to sell the entire volume to the domestic market. GAIl is looking to trade 1 million tonne a year of the US lNG via its Singapore office.
It has signed a 20-year terminal service agreement with Richmond, Virginia-based Dominion to lift 2.3 million tonne of lNG from the Cove Point project. GAIl also has a contract with Cheniere Energy to import 3.5 million tonne a year of lNG from the Sabine Pass terminal in louisiana.