This month, Asian LNG spot prices fell to record lows of approximately US$3 per million Btu. This has made gas supplies exchanged via existing long-term deals unappealing for some price-sensitive customers in India.
Over the last 10 years, GAIL has over-committed itself to new LNG volumes from the US (5.8 million tpy) and Russia (2.5 million tpy). Indeed, the company rushed to secure new supply deals during a period of scarcity and double-digit spot prices, which has now left it in the difficult position of need re-sell the majority of its supplies brought in by long-term deals.
In his first public statement since recently taking over as Gail’s new Chairman, Manoj Jain told media that the widening gap between spot and long-term LNG prices was a cause of concern for the company and the biggest risk it was facing.
