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GAIL Executes MoU with Chubu for Joint LNG Procurement

Source: 3/24/2014, Location: Asia

During the Gastech Conference being held in Seoul, South Korea, GAIL announced having signed a Memorandum of Understanding (MoU) with Chubu Electric Power Co., Inc., Japan (Chubu) on 21.03.2014. Under the MoU, GAIL and Chubu shall mainly explore possibilities for collaboration in the area of joint LNG procurement. Besides, the two companies will also seek to collaborate on shipping optimization. Chubu and GAIL are large LNG importers having considerable synergy between their LNG business profiles. It is assessed that with GAIL joining hands with Chubu for jointly pursuing LNG procurement and other allied business opportunities, such a collaboration shall augment GAIL’s efforts to aggressively source LNG volumes on competitive terms and would be a win-win proposition for both companies.

GAIL’s latest move is also in sync with the company’s recent efforts in establishing and promoting Asia LNG Forum, a sort of Asian LNG buyers’ club. GAIL is also actively working towards establishing a regional gas trading hub for Asia as well as an Asian gas index.

This MoU with Chubu is yet another effort by GAIL towards bridging the gap in demand supply of natural gas in the Indian market. This is in addition to other initiatives of GAIL towards LNG sourcing, creating LNG regasification infrastructure, reserving liquefaction tolling capacity in overseas projects and augmenting transmission capacity significantly over the next few years. GAIL will continue to make efforts to tie-up affordable LNG in its portfolio to meet the rapidly growing energy demand of the Indian market.

Speaking during the inaugural Ministerial session of the Gastech on 23.03.2014. Mr. B. C. Tripathi, CMD, GAIL, highlighted the enormous potential for gas demand in Asia and said that despite being the largest importer of LNG, Asian market is paying premium for LNG. On way forward for Asia, Mr Tripathi emphasized the need for developing synergies among Asian countries by promoting cross border pipelines to bring gas from central Asia, interlink Asian countries through gas pipelines and also promoting Asian Co-operation Forum to address Asian Gas Grid and Asian LNG forum and Asia Hub/index. Mr. Tripathi also said that in times to come, Asian market will prefer suppliers who have reliable/diverse source of supply and can offer transparent and competitive pricing methodologies. He reiterated that contract with destination flexibilities and innovative pricing including S-curve have become essential as it helps to tap the new demand in Asia by bringing a win-win proposition for both suppliers and buyers.

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