GAIL (India), a state-controlled natural gas firm, is initiating a tender to swap six U.S.-origin liquefied natural gas (LNG) cargoes for six deliveries to India. The tender is open until August 6, 2023, according to industry sources. GAIL plans to offer cargoes loading every other month in 2026, starting in February and concluding in December, on a free-on-board (FOB) basis from U.S. export terminals at Sabine Pass or Cove Point.
In return, GAIL seeks six LNG deliveries to India on a delivered ex-ship (DES) basis for the same months. As the largest natural gas distributor in India, GAIL’s strategies reflect the country’s increasing commitment to secure energy resources from the United States. The company has also reportedly begun discussions regarding potential purchases from the proposed $44 billion Alaska LNG project.
Strategic Energy Partnerships
The initiative to exchange cargoes aligns with India’s goal to enhance its imports of U.S. energy products, thus reducing its trade surplus with the United States while circumventing high tariffs. GAIL’s decision regarding a long-term offtake agreement with the Alaska LNG project will largely depend on the cost of supply.
According to Glenfarne, the company overseeing the Alaska LNG project, energy firms are poised to commit to purchasing $115 billion worth of LNG once the project is underway. This initiative has attracted interest from up to 50 companies looking to engage in long-term contracts.
U.S. officials have actively sought potential Asian investors for the Alaska LNG project, which is designed to transport natural gas from Alaska’s North Slope to local consumers and export LNG to U.S. allies across the Pacific. The project includes an 800-mile pipeline that will connect production centers in the North Slope to south-central Alaska for export purposes, ensuring the meeting of in-state gas demand through multiple gas interconnection points.
Political Implications and Support
The Alaska LNG project enjoys strong backing from the administration of former President Donald Trump, which has encouraged countries like Japan and South Korea to increase their LNG purchases as part of efforts to mitigate America’s trade deficit with its Asian allies. The successful execution of this project could significantly enhance energy ties between the United States and India, setting a precedent for future collaborations in the energy sector.
GAIL’s tender and its involvement with the Alaska LNG project signify a pivotal moment in India’s energy sourcing strategies. As the situation evolves, the outcomes of these negotiations could have lasting implications for both countries’ energy landscapes.
