GAIL, India’s largest gas distributor and pipeline operator, imports 14 million tonnes per year (mtpa) of liquefied natural gas (LNG) under various long-term agreements.

Of this total, around 2.5 mtpa, or up to 39 cargoes of LNG, will be supplied this year by Gazprom Marketing and Trading Singapore (GMTS), which is now a unit of Gazprom Germania.

Since late May, GMTS has not delivered 8 shipments of GAIL LNG and is uncertain about future shipments as it secures fuel for Europe, Jain said in a conference call with analysts.

He said GMTS had not declared force majeure, but “they are not scheduling (delivery of LNG cargo) at this time.

“Profitability will definitely be affected if the situation remains as it is today. There are challenges for the quarter,” he said, adding that GAIL’s gas marketing and transmission business would be affected due to lower supply.

GAIL has reduced its supply to fertilizers and industrial customers, in addition to cutting operations at its petrochemical plant in Pata, northern India, by more than 50% to avoid buying expensive spot LNG, Jain said, confirming a Reuters report.

The state-owned company is also advancing the delivery of some LNG cargoes overseas through time swaps and has chartered vessels to carry some of the US LNG it plans to trade.

GAIL has an agreement to import 5.8mtpy LNG from the United States.

Jain said GAIL is also seeking long-term LNG contracts to secure its supply, although an earlier tender for a 10-year 0.75mtpa contract failed.

The company concluded a 20-year agreement with Russian company Gazprom in 2012 for an average annual purchase of 2.5 million tonnes of LNG. Supply under contract started in 2018.

GMTS has signed the agreement on behalf of Gazprom. At that time, Gazprom Germania was a unit of the Russian state enterprise.

However, following Western sanctions against Russia for its invasion of Ukraine, Gazprom relinquished ownership of Gazprom Germania in early April without explanation and placed parts of it under Russian sanctions.