GAIL, the biggest operator of natural gas pipeline in India, is still scouting for the asset and has not yet zeroed in on any specific opportunity.“We are searching for an asset that can produce about 3 million tonnes per annum. That will help cover the pricing risk of about 50% of the LNG we have contracted to buy,“ the executive said. The company has contracts with producers in the US to buy about 6 million tonnes of LNG annually for 20 years, beginning 2017-18. The purchase price under the contracts is linked to Henry Hub, US index for gas prices.
The ownership of a producing block will mean that any loss arising due to increased prices of contracted LNG can be offset by gains from the producing block. GAIL already holds 20% stake in Carrizo’s Eagle Ford Shale acreage in the US. The company , mainly engaged in gas transportation and marketing, has in recent years picked up participating interests in about 20 exploration blocks in India and overseas, expanding its presence across the hydrocarbon value chain. GAIL has already sold to Shell and other firms about 2 million tonnes of LNG it had contracted from the US, its chairman BC Tripathi said on Wednesday .