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GOLDMINE UPDATE
What is happening in Gas Shortage?
- Aug 09 ,2022
- by admin
- Goldmine Update
GAIL has cut some supplies to some of its fertilizer and industrial customers. Since Gazprom did not supply gas, it faces some issues wrt supply but tight gas availability will also give them good profits. Gazprom used to provide 2.5 mmscmd of gas to GAIL of its total requirement of 15 mmscmd. So, about 17% of its gas supply is impacted in the short term.
How is GAIL managing the situation? GAIL is buying its forward supplies of 2023 from the US to make up for the current shortfall. It is also diverting some gas from the USA, which it was supposed to trade, but is now brought to India and supplied to its domestic customers. GAIL has cut production at its Petrochemicals plant for the short term so that it can save on the Natural Gas used captively. There is going to be some temporary impact for a month or two, but things will settle and Gazprom may start its supplies sooner than later. Gas prices are phenomenally high and it will prompt more production across the World, even from challenging fields.
So, eventually, supply will increase and things will get normal. So, the negative market reaction is unwarranted and may be seen as an excellent buying opportunity about six months down the line.
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