BENGALURU (Reuters) – GAIL (India) Ltd, the country’s largest gas distributor, reported a bigger-than-expected 46.3% drop in quarterly profit on Friday, hit by weak gas sales due to disruptions of a former unit of the Russian energy giant Gazprom.
The company’s stand-alone profit fell to 15.37 billion Indian rupees ($186.24 million) in the July-September quarter from 28.63 billion rupees a year earlier.
Analysts on average had expected GAIL’s profit to fall to Rs 20.80 billion, according to Refinitiv IBES data.
Nonetheless, GAIL’s operating revenue rose 78.9% to Rs 384.91 billion as higher fertilizer prices and industrial customers helped offset weak sales volumes.
“Due to ongoing geopolitics, there has been an LNG supply disruption from one of the company’s long-term LNG suppliers,” GAIL said in a statement.
Reuters had reported that GAIL had to limit its LNG supplies because its longtime partner GMTS, a former unit of Russian state-owned Gazprom, had not delivered shipments since May. One-fifth of GAIL’s total LNG volume from overseas was obtained by Gazprom.
GAIL entered into a 20-year agreement with Gazprom Marketing and Singapore (GMTS) in 2012 for annual purchases of an average of 2.5 million tonnes of LNG.
At the time, GMTS was a unit of Gazprom Germania, now called Sefe, but the Russian parent company relinquished ownership of Sefe after Western sanctions following the Russian invasion of Ukraine.
So far, Sefe has failed to supply 17 shipments, which equates to about 8.5 to 9 million cubic meters per day, said RK Jain, finance manager at GAIL.
In addition to reducing customer supplies, GAIL has reduced operations at its petrochemical plant.
Jain said GAIL purchased 1-1.5 LNG shipments from spot markets last quarter and may buy similar amounts this quarter to meet local demand.
GAIL signed an agreement with Abu Dhabi National Oil Co, or ADNOC, earlier this week to explore short- and long-term LNG supplies.
Shares of the company closed down 2.2% on Friday. ($1 = 82.5300 Indian rupees)
(Reporting by Biplob Kumar Das and Nidhi Verma; Editing by Savio D’Souza)