Energy U-Turn: GAIL and Indian Oil’s Bold Move Could Reshape India’s Fuel Future

India's leading energy buyers, such as GAIL India Ltd. and Indian Oil Corporation (IOC), have rejected recent tenders to buy liquefied natural gas (LNG) in light of exorbitant prices, marking a drastic change in the direction of the nation's energy buying strategy. The decision is in response to high LNG prices in the international market, causing other fuels like oil products to become more interesting for Indian consumers.

 

Key Highlights:

 

Tender Cancellations: IOC and GAIL canceled their newest LNG buying tenders after sellers proposed prices well above usual levels, industry sources said. This has made India's April LNG imports fall to a record 1.9 million tons—a 5% reduction compared to the same month in 2023 and the lowest one-month volume since December 2023.

 

Switch to Lower-Cost Fuels: Indian energy firms are now switching to lower-cost oil products to supply domestic markets, a trend likely to take pressure off the constrained global LNG market and reduce prices for other consumers.

 

Global Price Pressures: The surge in LNG prices has been further fueled by supply disruptions and heightened competition from Europe and East Asia, compelling developing economies such as India to reconsider their energy mix.

 

Strategic Long-Term Moves: GAIL is working hard to find long-term LNG supply contracts and equity positions in foreign projects in order to tie up future supplies at more stable prices, particularly as new US LNG projects go on stream after 2026.

 

As LNG prices remain unsustainable at high levels, India's energy majors are reworking strategies, focusing on cost effectiveness and supply security in a global market that remains turbulent.

 

Sources: Bloomberg, Business Standard, The Print