GAIL sinks as Russia’s Gazprom invokes force majeure on LNG cargo

Reuters reported on August 1 that the state-owned gas trading company cut down supply of LNG to fertiliser companies and industries in a bid to ration the critical fuel.

While GAIL can purchase LNG from the spot market, a CNBC-TV18 report said that the company’s clients were unwilling to pay the higher prices. Power companies in particular are unlikely to purchase expensive LNG from GAIL, the report said.

Investors fear the unfolding crisis could sharply hit GAIL India’s natural gas volumes and earnings in the coming quarters as it becomes a collateral damage in the brinkmanship between Europe and Russia.

The diversion of LNG supplies by the Singapore unit of Gazprom, which is under the control of the German government after Russia’s invasion of Ukraine, has come as a shocker to the international markets.

Europe is desperate to secure LNG supplies after Russia drastically choked natural gas supplies to the continent in retaliation to the various sanctions imposed on the country by the European Union and the US.

At 10.42 am, shares of GAIL India were down 2.6 percent at Rs 143.50 on the National Stock Exchange.

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