GAIL launched an expression of interest on April 11. Interested bidders are required to submit offers by April 28.
According to the document, GAIL is interested in sourcing 1 million metric tons per annum of LNG from an existing or upcoming liquefaction project in the US on a free on board (FOB) basis for 15 years.
“The contract period for LNG supply may be extended further by 5/10 years on a mutual basis. LNG supply/offtake shall commence tentatively in calendar year 2029 to 2030 from an existing project and in 2030 from an upcoming project,” GAIL said.
The firm said it will source LNG from the company, which has the right to sell LNG from the project.
Equity
As per equity, GAIL said it is interested in acquiring a stake in an existing or upcoming project in the USA, which is scheduled for commissioning at the latest by 2030.
If the entire value chain of the project, such as asset ownership, LNG sale rights, operation and maintenance, etc., is undertaken by a single company, the equity option shall be exercised by GAIL in that company, according to the firm,
If different companies are handling the value chain of the project, the equity option shall be exercised by GAIL in the holding company, which has 100 percent beneficial ownership of the entire value chain of the project.
For both the above cases, GAIL said there are three options in which it would acquire the equity.
For an LNG company/holding company having up to 5 mtpa capacity, GAIL shall have an equity option equivalent to 26 percent equity.
Moreover, for an LNG company/holding company having more than 5 mtpa
capacity but less than or equal to 10 mtpa capacity, GAIL shall have an equity option equivalent to 15 percent equity.
Lastly, for an LNG company/holding Company having more than 10 mtpa capacity, GAIL shall have an equity option equivalent to 10 percent equity, it said.
In 2023, GAIL issued a similar tender to buy equity in a US LNG project.
However, the Biden administration said in January 2024 it will pause pending decisions on exports of LNG to non-FTA countries until DOE can update the underlying analyses for authorizations.
In January this year, US President Donald Trump lifted a moratorium by the former Biden administration on non-FTA LNG export permits.
Since then, the Trump administration has issued several approvals related to US LNG exports.
GAIL’s LNG business
GAIL is an end user for LNG and sells regasified LNG to customers in the fertilizer, city grid, power, refinery, and petrochem sectors, amongst others in India.
The firm owns and operates a large network of natural gas pipelines in India.
In addition, it holds a stake in India’s largest LNG importer, Petronet LNG.
GAIL has a diversified LNG sourcing portfolio for over 15 mtpa, which includes supply sources from various geographies both on FOB and DES basis.
The long-term contracts include volumes from the US, Qatar, and the UAE. The firm has a long-term contract with US LNG exporting giant Cheniere for Sabine Pass volumes.
GAIL also has a fleet of chartered LNG carriers.
