OIL & GAS

Gas sales by Petronet LNG, GAIL dip by a quarter, firms to invoke force majeure with foreign companies

Following the imposition of a national lockdown since March 22, sales of natural gas by Petronet LNG and Gail India have dropped by 20-25 million metric standard cubic meter per day (mmscmd) or around 25%, as consumption across power, fertiliser, refineries, and city gas distribution (CGD) sectors have fallen substantially.

Given the 21-day lockdown, the two firms may also face issues in lifting the contracted cargoes arriving at ports in the near future and ask foreign suppliers for rescheduling of the shipments. The companies have already issued force majeure notices to their suppliers, which may allow them to renegotiate the scheduling of cargoes over the coming weeks and months.

Petronet LNG managing director & CEO, Prabhat Singh told FE, “As per the relevant clause in the contracts we have issued force majeure notices to our suppliers following the complete lockdown situation in the country. We will discuss with our suppliers in coming days on how to go about rescheduling of the cargoes.”

Petronet LNG imports around 250 cargoes in a year and plans to import around 260-270 cargoes in FY21. Petronet’s around 144 cargoes or 9 million tonne of LNG is tied on long term contract, while the balance is sourced from the spot market.

“Given the current situation we may have to reschedule some of the cargoes in the short term depending on the offtake from our clients,” Singh said.

Source
financial express
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