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India's gas utility GAIL pays for Russian LNG imports in US dollar

Gazprom reportedly is looking to wean away from the US currency. The US and European nations have imposed sanctions on Russia for the military action but have so far excluded energy trade from the sanctions.

India's gas utility GAIL pays for Russian LNG imports in US dollar

New Delhi, March 28 - Neftegaz.RU. According to the Press Trust of India, GAIL has a deal to receive 2.5 million tonnes of LNG annually on a delivered basis from Russia's Gazprom.
This translates into 3 to 4 cargoes or ship loads of super-cooled natural gas every month
A source with direct knowledge of the matter said:
  • The contract with Gazprom provides for making payments in US dollars
  • Payments become due 5-7 days after the delivery of the LNG cargo
  • The last payment was made on March 23, which was in US dollars
An LNG shipload was received on March 25 and its payment will be due in early April.
There is no indication that the payment for this cargo will be in a currency other than US dollar, sources said.
Another source said:
  • So far, the US dollar payment continues without any problem
  • Gazprom has so far not communicated anything to GAIL about change in payment mode
Sources said the last payment was settled through State Bank of India (SBI) - the bank that has been used to pay for imports from Gazprom since the start of supplies in June 2018.

GAIL, they said, has so far not received any written communication from Gazprom for change in the currency for settling the payments.
One of them said:
  • In case the reports of Gazprom wanting to switch payment to Euro come true, it needs to be examined how the change in currency mentioned in the signed contract can be done
  • In case such a request comes, GAIL will seek exchange rate neutrality in switching the payment to Euro from US dollar
  • Those details will have to be worked out
India, which traditionally has had close ties with Moscow, has refrained from outright condemnation of Russian action but has called for an end the conflict in Ukraine.
It has not banned Russian oil & gas imports, unlike several Western countries, and on the contrary has snapped up distressed Russian oil at deep discounts.

Its LNG supplies from Gazprom too have continued without any hindrance.

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