State-owned GAIL said on Thursday that one of its long-term suppliers, Petronet, had issued a force majeure notice on March 3 under its gas sale and purchase agreement.
“The notice has been served due to constraints faced by certain LNG vessels arising from maritime navigation restrictions related to the Strait of Hormuz during transit between India and Qatar, and as well as possibly due to the reported shutdown of the liquefaction facility at Ras Laffan,” it said.
Further, QatarEnergy, Petronet’s upstream LNG supplier, has also issued a communication
indicating a potential force majeure event owing to the recent hostilities in the region, GAIL noted.
Consequently, due to supply restrictions imposed by Petronet, “the allocation of LNG quantities to GAIL under the said contract has been reduced to zero with effect from March 4.”
“GAIL is currently assessing the situation with respect to any supply curtailment that may need to be imposed on its downstream customers. Notwithstanding the above, LNG supplies to GAIL from other sources/suppliers are currently unaffected,” the company said.
“At this stage, the potential impact of the ongoing force majeure situation cannot be quantified,” GAIL added.
GAIL and Petronet
GAIL is a shareholder in Petronet, along with three other major Indian firms, ONGC, IOCL, and BPCL.
Petronet operates the 17 mtpa Dahej LNG terminal and expected to launch an additional 5 mtpa capacity at the facility this month.
The company also operates the 5 mtpa Kochi facility.
On the other hand, GAIL 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.
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.
GAIL also has a fleet of chartered LNG carriers.
