India's GAIL and Vitol Asia sign 1 million mt/year LNG supply contract

India's state gas company GAIL and commodity trader Vitol Asia have signed a long-term LNG deal for around 1 million mt/year for a period of about 10 years, commencing 2026, they said Jan. 5.

Under this deal, Vitol will deliver LNG from its global LNG portfolio to GAIL in India on a pan-India basis, they said in a statement.

This long-term LNG deal with Vitol will augment GAIL's large LNG portfolio and contribute to bridging India's demand and supply gap of natural gas, Sandeep Kumar Gupta, GAIL chairman and managing director, said in the statement.

GAIL's marketing director Sanjay Kumar said at an event in Singapore that the company was signing the deal as demand for natural gas in India was consolidating and the long-term contract was part of negotiations GAIL had carried out with various LNG suppliers.

GAIL had been in talks with suppliers from the Middle East and the US in 2023 before the deal with Vitol, which was made on a DES basis at a price linked to crude oil, according to market sources. S&P Global Commodity Insights had reported on an imminent deal of 1 million mt/year at the end of 2023.

GAIL currently has two long-term agreements to buy a combined 5.8 million mt of LNG from the US on an FOB basis and a 2.5 million mt supply contract with Germany's state-owned Securing Energy for Europe GmbH on a DES basis. GAIL's long-term US contracts are linked to Henry Hub while its contract with SEFE is linked to crude oil prices.

Before GAIL, Indian Oil Corp. signed binding heads of agreement deals with Abu Dhabi National Oil Co. LNG and TotalEnergies.

IOC's deal with ADNOC LNG is for 14 years for 1.2 million mt/year, and with TotalEnergies for 10 years for 800,000 mt/year. The deals are linked to oil prices on a DES basis.

Petronet LNG Ltd., partly owned by GAIL, is still in negotiations with QatarEnergy to extend its long-term agreement beyond 2028 after it expires. Petronet currently receives 8.5 million mt/year from Qatar's RasGas.

On Dec. 27, Petronet LNG submitted an exchange filing saying it had executed binding transaction documents, including a lease deed and port service agreement with Gopalpur Ports for setting up a floating storage and regasification unit-based LNG terminal with a capacity of 4 million mt/year in the first phase of the project.

The deal has a provision for converting to a 5 million mt/year land-based terminal at Gopalpur Port in the eastern state of Odisha.

GAIL, which owns and operates a network of over 16,000 km of natural gas pipelines across India, is working on multiple pipeline projects. The company has a 70% market share in gas transmission and a 50% share of gas trading share in India, and it also has a large city gas distribution business.

Vitol has a global LNG portfolio with long-term LNG supply from North America, Africa, the Middle East and Asia, a fleet of LNG vessels and it delivered around 14 million mt/year of LNG in 2022, the statement said.