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GAIL in trouble over US LNG commitments-II: Oil price crash brought down its business model
Jun 06:
So where is GAIL headed with the bulk of its US commitments?
8It does not have the depth and expertise to play the international market where sophisticated and deep pocketed players have a hegemony.
8So the gas major is headed to the only place where it feels safe, which is India.
8But it will be playing a dangerous game of arbitrage in its own backyard over which it will have little or no control, with the capacity to singe its balance sheet.
8GAIL is going to buy at Henry Hub prices in the US and then sell in oil-indexed contracts in India.
8That was in fact the original plan, but that was when oil prices were ruling at over $ 100/bbl and there was a wide differential between HH and oil indexed pricing.
8But oil prices have crashed and the business model went down with it.
Click on Reports for more
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8It does not have the depth and expertise to play the international market where sophisticated and deep pocketed players have a hegemony.
8So the gas major is headed to the only place where it feels safe, which is India.
8But it will be playing a dangerous game of arbitrage in its own backyard over which it will have little or no control, with the capacity to singe its balance sheet.
8GAIL is going to buy at Henry Hub prices in the US and then sell in oil-indexed contracts in India.
8That was in fact the original plan, but that was when oil prices were ruling at over $ 100/bbl and there was a wide differential between HH and oil indexed pricing.
8But oil prices have crashed and the business model went down with it.
Click on Reports for more
