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GAIL Fights New LNG Booking Platform Costs
27 Aug
Summary
- GAIL opposes new LNG terminal capacity booking platform.
- Platform may increase costs for consumers without adding value.
- Half of India's LNG capacity is currently underutilized.
India's leading natural gas marketer, GAIL, has raised objections to a new platform proposed for booking capacity at Liquefied Natural Gas (LNG) import terminals. GAIL contends that the platform would introduce extra costs for consumers while providing minimal added value.
The proposal from the Indian Gas Exchange (IGX) suggested acting as a facilitator for these bookings. However, GAIL, in its submission to the Petroleum and Natural Gas Regulatory Board (PNGRB), stated that imposing an "artificial layer of transaction costs" is unwarranted. This is particularly concerning as downstream natural gas consumers are already burdened by high and volatile global LNG spot prices.
GAIL highlighted that information asymmetry has not been a significant barrier in the current framework, and no major inefficiencies necessitate a separate booking platform. With over half of India's approximately 57.5 million tonnes per annum LNG regasification capacity lying underutilized due to weak domestic demand, GAIL believes the proposed platform is unlikely to improve capacity utilization meaningfully.
