India is trying to boost its imports of liquefied natural gas from the United States, UAE, Saudi Arabia, and Iraq. India engaged the four countries at a government-to-government level in order to secure more cargoes of liquefied natural gas at affordable prices.
India’s state-run GAIL, the leading natural gas producer responsible for natural gas processing and distribution in India, recently bought spot LNG at more than $40 per million British thermal units amid high global LNG prices.
The shift in where the energy is being purchased from comes after a breach of contract by the Russian gas company Gazprom’s subsidiary Gazprom Marketing and Trading Singapore (GMTS).
India’s outreach to other nations besides Russia comes at a time when India can neither seek arbitration from Gazprom nor accept compensation from the world’s largest gas explorer for breach of contract.
The United States supports India’s efforts to diversify its gas supplies in line with climate goals and to reduce gas demand.
The U.S. is on track to become the largest exporter of LNG this year. American exports of natural gas have increased by more than 20 percent since October of last year. According to forecasts, American exports of energy will grow an additional 14 percent by the end of 2022.
Indian officials said that the country is looking for additional cargoes from other countries as much as possible. So far, the supply of gas is not an issue, they said. The issue is the cost of the gas.
India is particularly disadvantaged because higher global prices raise import bills, trigger inflation, and widen its trade deficit.
India is dependent on imports for energy. It is the third biggest oil importer and consumer in the world. A massive 85 percent of India’s oil needs and 55 percent of its natural gas needs are imported to the country.
In July, India’s oil imports from Saudi Arabia rose by more than a quarter, increasing the imports by 25.6 percent.