India’s Gail seeks swap for August-loading LNG

Indian state-controlled gas distributor Gail is offering a LNG cargo loading in the US in August, in exchange for a cargo for delivery to India in the same month.

Gail is offering a cargo loading on 9 August from the US' 33mn t/yr Sabine Pass terminal in exchange for a 15-18 August delivery to the 5mn t/yr Dhamra terminal, through a tender that will close on 4 July.

The firm was last in the market to seek a swap just last month, for the exact same delivery windows. Gail already issued this tender twice in June, but may have been unsuccessful in awarding the tender both times.

Gail remains focused on issuing destination swap tenders to optimise its contracted US volumes. But falling spot prices may compel the firm to emerge for outright spot purchases in time to come.

Indian state-controlled firm Gujarat State Petroleum (GSPC) likely purchased a 20-31 August delivery to the 5mn t/yr Mundra terminal at around $11.60-11.70/mn Btu, through a tender that closed on 2 July, traders said. The requirement was likely to fulfil captive demand from its subsidiary city gas supplier Gujarat Gas, they added.

This transaction level is markedly lower than the previous spot transaction to India just last week. Indian state-controlled refiner BPCL purchased a delivery either on 30 July or 7, 8, 9, 11 August at around low-$12s/mn Btu, through a tender that closed on 26 June.

Spot demand from India will likely fall in the weeks and months to come as the monsoon season has began in the country. More rains will increase hydropower generation, weigh on the need for additional gas-fired power generation as well as lower temperatures and reduce cooling demand, traders said.

The Argus-assessed price for deliveries to India and the Middle East was last at $11.89/mn Btu for the second half of August on 2 July, about 3¢/mn Btu higher than a week earlier, but 20¢/mn Btu lower than a recent peak on 27 June.

By Rou Urn Lee