January 6, 2024 [Oil Price]- GAIL (India) has signed a long-term LNG deal with Vitol, under which the top commodity trader will supply around 1 million metric tons of LNG annually for 10 years starting in 2026, the Indian state-held firm said on Friday.

As part of the deal, Vitol will deliver LNG from its global LNG portfolio to GAIL in India. GAIL owns and operates a network of over 16,000 kilometers (9,942 miles) of natural gas pipelines in India and works on multiple pipeline projects to further enhance the gas supply and coverage. GAIL has around 70% market share in gas transmission and a share of over 50% in gas trading in India.

The agreement “will contribute to bridging India’s demand and supply gap of natural gas,” GAIL chairman and managing director Sandeep Kumar Gupta said in a statement.

“India is a significant and growing LNG market and we are excited to bring LNG supply from our global LNG portfolio to meet this rising natural gas demand in India,” Vitol Group’s chief executive Russell Hardy said.

India plans to significantly increase its natural gas consumption as it looks to boost its share in the energy mix from 6.3% now to 15% by the end of this decade.

But the country and its LNG importers are particularly sensitive to surging spot LNG prices and often retreat from the spot market when prices jump. Therefore, India and its large state firms are looking to sign long-term LNG supply deals.

Earlier this week, India’s Oil Secretary Pankaj Jain said that Petronet LNG, the largest natural gas importer in India, expects to sign later this month an agreement to extend its LNG supply deal with Qatar beyond 2028.

“We are pretty close to signing the deal,” Jain told reporters in New Delhi on Wednesday, as carried by Reuters.

Qatar, one of the world’s top LNG exporters, prefers to sign long-term agreements with its buyers, and had given its Indian customers until the end of 2023 to negotiate possible extension and/or renewal of the current agreements beyond 2028.

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