GAIL has Signed A Long Term Deal with Abu Dhabi

GAIL Ltd. has concluded a long-term deal to purchase LNG from the UAE’s ADNOC Gas for 10 years.

About the Deal

GAIL has announced that it has signed an LNG deal with Vitol Asia for the supply of approximately 1 million metric tons of LNG per year into India. 

This deal will be for a period of 10 years, starting in 2026. As part of this agreement, GAIL will also receive deliveries from ADNOC, starting from 2026 for a period of 10 years across India.

Importance

• This agreement will assist India in meeting its growing energy security requirements. It will also support GAIL's strategic growth objectives of catering to downstream customers in the rapidly evolving natural gas landscape of the country. 
• The deal will bridge the gap in India's demand and supply of natural gas and open up more opportunities for strategic partnership between GAIL and ADNOC in other areas of the energy sector. 
• Although the deal's volume is only 0.5 million mt/year, which accounts for merely 2% of the total imports expected by 2026, such agreements with low volumes help the market protect itself from volatility in the spot market. 
• GAIL's efforts to secure supplies are also aligned with India's goal of increasing the share of natural gas in the energy basket to 15% from the current levels of around 6%-7%.

About GAIL

• GAIL (India) Ltd. was established in August 1984 as a Central Public Sector Undertaking (PSU) under the Ministry of Petroleum & Natural Gas (MoP&NG). 
• Its purpose is to promote efficient and cost-effective use of natural gas and its byproducts for the nation's benefit.
• The government of India currently holds 51.45% of the shares of the company. In 1997, GAIL was awarded Navratna status and is now one of the ten Maharatna Public Sector Undertakings, the highest status conferred to any PSU.
• GAIL owns and operates a network of over 16,000 km of natural gas pipelines across the country. 
• The company is also working on enhancing its pipeline network. It holds approximately 70% of the market share in gas transmission and has over 50% of the share in gas trading in India.

What is LNG?

• Liquefied Natural Gas (LNG) is a form of natural gas that has been cooled to an extremely low temperature of -260°F (-162°C), causing it to condense into a liquid state. 
• This process reduces its volume by approximately 600 times, making it much more efficient and safer for transportation via specialised LNG vessels. 
• In everyday household tasks, we often use gas cylinders that are filled with LNG.