Indian Companies Buy Discounted Russian LNG Shipments Shunned By Rest Of World: Report

Indian companies, including Gujarat State Petroleum Corp and GAIL India Ltd bought several LNG spot shipments from Russia at prices below prevailing market rates

India acquires about three-quarters of its LNG under long-term contracts, but sweltering heat and frequent blackouts are forcing companies to top up with spot shipments. Image: Getty

Source : Getty

New Delhi: The liquefied natural gas (LNG) buyers from India are purchasing extra volumes from Russia at a discounted price, Bloomberg reported on Monday, quoting sources. Most other spot buyers are shunning the fuel from Russia because of Western sanctions.

Indian companies, including Gujarat State Petroleum Corp and GAIL India Ltd (GAIL), recently bought several LNG spot shipments from Russia at prices below the prevailing market rates, according to the sources with knowledge of the matter. They also told Bloomberg that the Indian firms may purchase more as long as the Russian fuel remains cheaper than rival suppliers.

However, GSPC, GAIL, and Ministry of Petroleum and Natural Gas didn’t respond to Bloomberg's requests for comment.

India acquires about three-quarters of its LNG under long-term contracts, but sweltering heat and frequent blackouts are forcing companies to top up with spot shipments, which are trading at well above normal due to a global supply crunch.

Some importers are snapping up the discounted Russian shipments as demand for gas in the fertiliser sector is also rising.

According to the report, the Russian LNG shipments were bought by Indian companies through recent spot tenders, as those cargoes were offered at lower prices than other suppliers. Few LNG importers, outside of India, allow for suppliers to offer Russia-origin shipments in purchase tenders.

India, which is also seeking deeper discounts on Russian oil, has emerged as a last resort for Russian fuels traded on the spot market and shunned by the world due to its invasion of Ukraine.

There are no direct sanctions on LNG, but top buyers, including Japan and South Korea have halted purchases to avoid future penalties or reputational damage and PetroChina said on Friday that it isn’t seeking any discounted Russian spot supply.

While additional spot LNG shipments are being avoided, most Russian deliveries under long-term contracts are still being accepted by customers around the world.