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GAIL in trouble-VII: Company seems to have missed the portfolio bus, for now
Jan 04: The website carries here a detailed investigation of the two emerging trends in the LNG market that GAIL has not been able to take advantage of, as a consequence of which it has been forced to look at bringing the bulk of the US LNG commitments to India, the only market is is familiar with.
8One is the point to point asset specific sale of LNG, which GAIL is familiar with, and the other is an integrated production, supply, trading and marketing (ISTM) sales strategy that GAIL has not been able to come to grips with.
8The ISTM approach allows for both spatial (optimization between different locations) as well as temporal (optimization between different time frames) flexibilities.
8The latest data carried here by this website will show that all the big names with equity LNG are already heavily into the portfolio business as part of their ISTM strategies, with portfolio deals stretching well into the future.
8GAIL, an equity holder for 5.8 MMTPA of LNG out of the US, seems to have missed the portfolio bus almost entirely.
8Except for placing a small quantity of LNG on a long term basis, the Indian gas major has not been able to push its way through in this highly sophisticated and competitive market.
8GAIL's approach so far has been one dimensional and ham handed: that it will somehow be able to garner sellers in Europe or somehow bring the LNG to India, either directly or via the swap mechanism.
8But GAIL seems to have been both out gunned and out maneuvered. 
8GAIL has been reactive when it should have been proactive. All it really does is to float an international tender to swap or sell its LNG commitments, much the same way as it does when ordering for a spot cargo India, and then wait for someone to respond.
8But as the Indian gas major waits for a response, more agile players would have already tied up the business.
8It is too late for GAIL to learn the tricks of the trade, as it requires a sophistication of approach and specialized manpower that the company lacks.
8The company has no option but to offload its US commitments into India at a huge discount.
8A hit of USD1/mmBtu if not more -- which all but inevitable as of now -- could wipe out as much as 22% of GAIL's EBIDTA.
8Everyone is now waiting to figure out what is going to be the exact level of discount -- as that will depend on the prevailing ex-ship LNG price in India -- and by how much will GAIL's profitability be eroded by the discount. 
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