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GAIL delivered setback 

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LNG Industry,

Bloomberg is reporting that GAIL India has received notification from Russia’s Gazprom PJSC that it plans to start deliveries of LNG through a contract the Indian buyer is trying to renegotiate.

The world’s largest gas producer wrote to GAIL this month saying it’s preparing to send cargoes from April under the 2.5 million tpy deal that was agreed in 2012. The notification, which is standard practice before a contract starts, is seen as a setback for GAIL’s efforts to renegotiate.

GAIL, which has contracted new long-term volumes that account for almost half of India’s total LNG imports in the year to March, is struggling to find buyers in the local market where adverse tax provisions are hindering the use of the fuel. A lack of domestic buyers has forced the company to sell some LNG sourced from the US on the international market.

GAIL Chairman B.C. Tripathi said late last year the company was seeking to overhaul the contract with wholly owned unit, Gazprom Marketing and Trading Singapore, and discussing terms including duration, price and source of supply. In October, Petronet LNG, in which GAIL is a key shareholder, successfully renegotiated two contracts and GAIL was working toward renegotiating two more.

New Delhi-based GAIL ended 0.8% lower at 467.45 rupees in Mumbai on 27 November. The shares have gained 42% this year, outpacing a 27% rise in the benchmark S&P BSE Sensex.

Petronet LNG Ltd. reached an agreement to rework a LNG supply agreement with Exxon Mobil Corp. The Indian company also renegotiated a similar deal for gas supplies with Qatar in 2015.

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