India’s GAIL rationing gas as former Gazprom unit cuts supplies

NEW DELHI

India’s largest gas distributor GAIL (India) Ltd. has started gas rationing, cutting supplies to fertiliser and industrial clients after imports were hit under its deal with a former unit of Russian energy giant Gazprom, two sources familiar with the matter said.

Lower gas supplies will affect impact India’s urea production, and a sustained cut would lift imports of the soil nutrient, a fertiliser industry source aware of the cuts said.

Neither GAIL nor India’s fertiliser ministry responded to Reuters’ requests for comments.

Gazprom Marketing and Trading Singapore (GMTS), now a subsidiary of Gazprom Germania, has failed to deliver some liquefied natural gas (LNG) cargoes to GAIL and has said it may not be able to meet supplies under their long-term deal.

GAIL, which imports and distributes gas and also operates India’s largest gas pipeline network, has cut supplies to some fertiliser plants by 10% and restricted gas sales to industrial clients to the lower tolerance limit of 10-20%, the sources said.

The state-run company is operating its petrochemical complex at Pata in northern India at about 60% capacity to save gas for other clients, they said. GAIL has advanced maintenance shutdown of some units at the 8,10,000 tonne-a-year plant, one of the sources added.

An industrial consumer said GAIL had restricted its gas quantities to a ‘take or pay level’, the lowest level at which it will not attract a penalty from the customer.