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GAIL's US LNG commitments-I: Investigation needed
Jun 22: Benchmarked against the Japan Korea Marker (JKM)  prices, US LNG exporters are currently earning estimated profit margins of almost $4/MMBtu.
8This is because of elevated crude linked LNG contract prices juxtaposed against Henry Hub priced  US cargoes
8That profit calculation — which includes gas feedstock and transport costs, shipping, Panama Canal and terminal fees — typically reaches above $3/MMBtu only during the elevated-demand months of winter.
8Given this rising differential, when GAIL should be capitalizing on its, what is the Indian gas major doing with its LNG cargoes from the US still remains a big mystery?
8An investigation is necessary to understand how GAIL is dealing with its cargoes in an increasingly sophisticated and commoditized LNG market.
8Is it happy merely pushing its offtake liability on to someone else instead of dirtying its hands with direct client supplies? Is it fully leveraging the arbitrage opportunities now available?
8GAIL is a high volume long-term offtakers of US LNG without an attendant back-to-back vessel feeet. There is no doubt that a domestic shipyard lobby sabotaged an attempt by the gas major to have its own captive fleet by insisting on a local content clause.
8How handicapped has GAIL become without its ability to leverage its own shipping fleet? What will it do when the shipping market demand-supply balance turns negative as is widely anticipated by 2019-20?
8These and other attendant questions require immediate answers.
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