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GAIL's US LNG commitments-V: How GAIL missed the bus
Jun 22:
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 and 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.
8Given the volatility of the market, earlier GAIL would have taken a hit by supplying the Indian market and, in a panic mode, it went and tied up all its cargoes to third parties, only to find out that it did not have enough left to send to India or elsewhere in Asia when the arbitrage turned favourable.
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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 and 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.
8Given the volatility of the market, earlier GAIL would have taken a hit by supplying the Indian market and, in a panic mode, it went and tied up all its cargoes to third parties, only to find out that it did not have enough left to send to India or elsewhere in Asia when the arbitrage turned favourable.
Click on Report for more
