QatarEnergy has won a bid to supply 12 cargoes a year to Indian state-run gas distributor Gail under a five-year LNG supply contract beginning in 2025, according to market sources.
Gail floated a tender in early November, inviting bids for supplies of LNG from April 2025 until March 2030, with prices linked to the US Henry Hub (HH) on a delivered basis to India's west coast, according to a tender document seen by Argus. The tender closed on 13 December.
QatarEnergy will supply LNG at 115pc HH in addition to a constant of $5.6/mn Btu, sources told Argus.
Gail in turn has contracted with downstream customers in India at a contract price of 119pc HH in addition to a constant of $6/mn Btu, according to documents seen by Argus.
"Typically, a Henry hub linked contract only makes sense when it is for 10-15 years. But this tender is a unique one as it is just for five years," a source told Argus.
What is unclear is the source of supply. QatarEnergy and ExxonMobil's 15.6mn t/yr Golden Pass LNG project has been delayed after lead construction contractor Zachry Holdings filed for bankruptcy in March, according to a Federal Energy Regulatory Commission filing, prompting US federal regulators to give a three-year extension to finish building the plant.
The agreement with Gail may equate 3.6mn t of LNG supply over the five-year period to 2030, assuming a 60,000t LNG cargo size, and add to Gail's existing 5.8mn t/yr of LNG supply under a 20-year agreement from US' Sabine Pass and Cove Point on a fob basis till 2038.
The deal is also likely to support the demand for India's city gas distribution network as the government abruptly cut domestic gas allocations to city gas distribution firms in the past two months.
Gail aims to add 5mn-6mn t/yr of medium-to-long-term LNG contracts to take its overall LNG portfolio to 20mn-21mn t/yr by 2030 in addition to its existing long-term LNG portfolio of 15.38mn t/yr.
