GAIL stares at massive losses in its LNG business from 2018-19, Part-III: GAIL may end up not covering its fixed costs – 13 Apr 2016

The prolonged collapse in oil prices could not have come at a worse time for GAIL, as it dramatically narrowed the difference between oil indexed prices in Asia and Europe and the US HH price.
-- The closer proximity of European markets to the US means that Europe is more likely to feature as a destination point for GAIL LNG, or at least until Asian LNG prices start to show some strength again.
-- Transportation costs will be lower to Europe compared to deliveries to Asia. Meanwhile, several European countries, such as those in the Baltic region, are seeking to diversify sources of supply, which will be of benefit to US LNG exporters.
-- Even then, it is very likely that some of GAIL's booked capacity may not be fully utilized until global prices and demand growth recovers.
-- The gas major is staring at the prospect of paying fixed charges for booked liquefaction capacity as well as rentals for the LNG fleet that it is now in the process of acquiring without delivering the cargoes anywhere because there may be no takers for them as other, more agile, suppliers grab market share. It won't make sense for GAIL to deliver LNG if its fixed costs are not covered.
-- A more likely scenario is where its fixed costs are partially covered. This will still translate into heavy losses on its US LNG transactions.