Russia’s LNG unit in S’pore defaults, supply to India hit

NEW DELHI: Russia has defaulted on the supply of at least 5 cargoes or shiploads of LNG to India after its retaliatory sanctions hit one of the companies that supply gas to India, sources said.

India’s largest gas firm GAIL has a long-term deal to import 2.85 MT of liquefied natural gas (LNG) per annum from a Singapore-based unit of Russian gas producer Gazprom.

The company has since June defaulted on the supply of 5 cargoes of LNG under that contract citing difficulty in sourcing gas due to sanctions, two sources briefed on the matter said.

While the contract provides for making up of the volumes not supplied later, the Russian firm has so far not indicated how and when it will make up for the lost volumes.

Sources said Gazprom has told GAIL that it will from hereon supply LNG on a best endeavour basis.

GAIL is now scouting for alternatives including tying up supplies from other sources in the US and the Middle East.

Moscow has in recent months imposed sanctions on 31 companies, including the owner of the Polish part of the Yamal pipeline that carries Russian gas to Europe, as well as the former German unit of Gazprom. The move was aimed at cutting off Russian gas supplies to the sanctioned entities, which were largely based in countries that have imposed sanctions on Russia in response to its invasion of Ukraine.

The companies sanctioned include Polish pipeline owner EuRoPol Gaz, Gazprom Germania and the Gazprom subsidiaries in Austria, Belgium, Bulgaria, Czechia, France, Germany, Italy, Hungary, Poland, Romania, Slovakia, Switzerland, UK.

GAIL has a contract with Gazprom Marketing & Trading Singapore. But the ownership of this company was reorganised and it was now under Gazprom Germania.

Since the sanctioned entities either do not have access or limited access to Russian gas, they are unable to fulfil their commitment to customers, sources said.

GAIL, they said, is exploring legal options to enforce the contract.

Previously, Gazprom made minor adjustments such as splitting shipments and rescheduling one cargo that was supposed to be delivered in May. But now it has defaulted on supply of 5 cargoes, including two in July. Under the deal, Gazprom is progressively increasing supplies to GAIL. It shipped 2 MT of LNG in 2021 and is to supply 2.5 million tonnes in 2022.