New Delhi: The largest Gail Gail Gas India (India) Limited continues to pay for liquefied natural gas (LNG) imports from Russian Gazprom in US dollars and will seek exchange rate neutrality in payments in other currencies such as euros, two sources said.
Gail has an agreement to receive 2.5 million tons of LNGs every year based on the Russian Gazprom. This translates to 3 to 4 cargo or sending super-cold natural gas contents every month.

“The contract with Gazprom provides to make payments in the US dollar,” the source with direct knowledge of the problem.

“Payment becomes maturing 5-7 days after Delivery of LNG cargo. The last payment was held on March 23, which in the US dollar.” The LNG ship was received on March 25 and the payment would mature in early April. There is no indication that this cargo payment will be in a currency other than the US dollar, the source said.

“So far, the payment of the US dollar continues without problems,” another source said. “Gazprom has so far not communicated anything to Gail about changes in payment modes.” The source said the last payment was completed through the State Bank of India (SBI) – Banks that have been used to pay imports from Gazprom since the start of supply in June 2018.

Gail, they said, so far did not receive written communication from Gazprom for currency changes to complete payments.

“In the event that the Gazprom report that wants to switch payments to the euro is a reality, it is necessary to check out how changes in the currency mentioned in the contract signed,” said one of them. “In terms of requests like that come, Gail will seek exchange rate neutrality in diverting payments to the euro from the US dollar. The details must be done.”

Gazprom reportedly wanted to wean from the US currency after the Russian invasion to Ukraine. US and European countries have imposed sanctions on Russia for military actions but so far exclude energy trade from sanctions. Russian banks continue to be on the main financial message Swift system, allowing payments for commodities purchased or sold.

“As long as Swift is available to complete payment, there should be no problem paying LNG imports, both in US dollars or euros,” said the source. “The only concern that Gail can have is an exchange rate. It is currently profitable to make payments in the euro but if it changes with strengthening rupees against the US dollar, then Gail wants to be protected.”

Gail has been in January 2018 utilizing the inability of the Russian energy giant to provide LNG from the Project Schtokman agreed upon in the Barents, to negotiate the agreed price in 2012. The price indexed from Japanese customs crude oil to Brent, and the slope of the related contract formula With oil derived, and hence the final price.

India, which has traditionally had a close relationship with Moscow, has refrained from direct punishment of Russian actions but has called for violence in Ukraine. This has not forbidden the import of Russian oil and gas, unlike some western countries, and vice versa has snapped Russian oil depressed with deep discounts.

The LNG supply from Gazprom also continues without obstacles.