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GAIL's US commitments: Swap deals won't help beyond a point
Aug 30: GAIL has been signing some time-swap and destination-swap deals to ease the burden of offtaking 5.8 MMTPA of annual LNG offtake from two US terminals.
8But the volumes are still very small and time periods of these swaps are very narrow as well
8Some of the recent swaps are for such small volumes that the company while announcing these deals have withheld the quantity involved.
8The hammer load of offtaking all of its LNG commitments in the US will eventually fall on the gas major as no major swapping deals have been arrived at so far.
8The gas major has been trying to renegotiate the $ 3/mmbtu processing charge for the Henry Hub priced gas offtake commitments but terminal operators in the US have turned down the offer to renegotiate.
8GAIL can either default on its commitment, which it is quite capable of, if push comes to shove, or take on the full blow of its losses from its US operations on its balance sheet
8Only time will tell how bad the situation is for GAIL
8Eventually someone will have to take the rap, but who will it be?
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