India’s largest gas distributor GAIL (India) Ltd (GAIL) has begun cutting gas supplies to a range of industries after ex-Gazprom unit GM&T Singapore failed to deliver five LNG cargoes.

According to Times of India, the company has not delivered the cargoes under a 20-year deal signed in October 2021 for 2.5 million tonnes a year of liquefied natural gas (LNG). 

Reliant on imports for 50% of its gas supply, India’s fertiliser industry could be hardest hit by the cuts, with a reliable gas supply essential to produce urea – a key component in fertiliser. 

Other reports suggest that the state-run company has reduced operating capacity at its Pata petrochemical complex by 60% to save gas for other clients. 

The source also revealed that GAIL has advanced maintenance shutdown of some units at the 810,000 tonne-per-year plant. 

By reducing supplies to some customers, the company is attempting to avoid penalties under so-called take-or-pay agreements. 

To make up for its gas supply shortage, GAIL is attempting to accelerate the delivery of cargoes that are scheduled for 2023 delivery, in addition to seeking LNG orders form the US. 

In a conference call last week the company’s Finance Director Rakesh Kumar Jain stated that GAIL is currently scouting for short, medium, and long-term contracts.

GM&T Singapore was previously a subsidiary of Gazprom-owned Gazprom Germania but - following Western sanctions against Russia - the industrial gas giant gave up ownership without explanation.