As India seeks new LNG supplies, speculation over possibility of reviving deal made during...

As India seeks new LNG supplies, speculation over possibility of reviving deal made during PM Modi’s visit to U.S. in 2019

Experts watch closely for any energy deals to be announced during PM Modi’s visit to Washington on June 22, which were the highlight of the Prime Minister’s visit to the U.S in 2019.

Amidst the focus on high technology and defence deals to be announced during Prime Minister Narendra Modi’s visit to Washington, experts are watching closely to see if energy deals, which were the highlight of his last big bilateral visit to the United States in 2019, will find a mention. In particular, it is India’s search for more LNG (Liquefied Natural Gas) imports in the wake of instability in Russian supplies after the war in Ukraine, as well as speculation over the revival of the 2019 agreement between Tellurian Inc, an LNG company, and Indian Public Sector Undertakings (PSU) in energy.

The new deal being looked at, which follows GAIL India’s Expression of Interest issued in February 2023, is considering Tellurian amongst a number of other American LNG suppliers for long-term contracts for one million metric tonnes per annum (MMTPA), and a possible equity stake of up to 26% in a U.S.-based LNG project, officials confirmed. 

“The offers received [from U.S. LNG companies], including that from Tellurian, are under evaluation for shortlisting the most suitable offer,” a GAIL spokesperson confirmed to The Hindu. Government officials, however, refused to comment on the timeline, or whether any announcement could be made during Mr. Modi’s visit, and Tellurian Inc. did not respond to requests for a comment.

During Mr. Modi’s previous bilateral visit in September 2019 (he travelled to Washington for a Quad summit in 2021), a Memorandum of Understanding signed by Petronet LNG to invest $2.5 billion in Tellurian Inc.’s Driftwood LNG project had been hailed by both Mr. Modi and former U.S. President Donald Trump at the ‘Howdy Modi’ joint rally they held in Houston. Tellurian was one of the main sponsors of the event, and company officials at the time had been upbeat about concluding the commercial agreement quickly. 

However, subsequently, the Petronet LNG board had expressed concerns about being tied to a fixed price on gas in an unstable market, that was expected to drop. After a number of extensions, and despite interventions by the Trump administration, the Petronet-Tellurian MoU was eventually terminated in 2020. In October 2022, Minister for Petroleum and Natural Gas Hardeep Puri met with Tellurian CEO Octavio Simoes, to restart talks, a meeting that came as the Ukraine war changed the global LNG market and disrupted Russian Gazprom LNG supplies to India. In February 2023, after GAIL India (one of the five energy PSUs companies in the Joint Venture agreement that make up Petronet) issued the Expression of Interest in contracts for LNG supplies and investing in up to 26% equity stake in LNG exporters, speculation grew that the Modi government would revive the Trump-era deal with Tellurian.

“We exchanged notes on the evolving gas markets & opportunities for Indian Oil Marketing Companies to invest in Tellurian’s projects in US,” Mr. Puri had tweeted after meeting Mr. Simoes in Houston on October 12, 2022.

Unlike India’s imports of oil from Russia, which have grown multi-fold since February 2022, from constituting less than 2% of the total to now more than 35% of its oil imports, the continuing uncertainty over Gazprom pipeline supplies are sending importers in search of new LNG sources.

Of the 15.39 MMT (million metric tonnes) imported from around the world in 2022, India imports about 5.8 MMTPA LNG from the U.S. under long term contracts signed in 2011.  Of this, GAIL receives 3.5 MMTPA from Sabine Pass and 2.3 MMTPA from Cove Point.  In 2022, India’s contract with Russia for 2.5 MMTPA was halted temporarily. In addition, India also purchases LNG from spot trade for short-term requirements, including from the United States, a country that officials say has emerged as the “largest and most consistent supplier” of LNG after Qatar and the UAE. 

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