Indian LNG importers, including Gail, Gujarat State Petroleum Corporation (GSPC), Torrent Gas, Bharat Petroleum Corp (BPCL), and Indian Oil Corp (IOC), are capitalizing on the current three-year low spot liquefied natural gas (LNG) prices, industry insiders reveal.
Spot LNG prices in Asia have dropped to between $8.3 and $9 per million British thermal units (mmBtu) due to sluggish demand and ample inventory levels in both Asian and European markets. This trend has prompted importers to increase spot cargo purchases, providing them with opportunities to expand sourcing and sales across various sectors such as power generation, fertilizers, refining, and more.
Last year, spot LNG prices averaged $18.75 per mmBtu, while in 2022, they surged to a record high of $70 per mmBtu amid the Russia-Ukraine conflict.
Despite LNG typically being traded through long-term contracts, the current price drop is favoring buyers in the short-term market. Power companies like Torrent Power and NTPC, along with refineries such as Reliance Industries and Hindustan Petroleum Corp (HPCL), are among those seeking additional LNG supplies.
With rising temperatures driving up power demand, especially during the impending summer season, expectations are high for record electricity consumption. The Central Electricity Authority (CEA) has forecasted a spike in power demand between March and June.
India’s LNG demand surged to 95 million cubic meters per day (mmcmd) in January 2024, up from 90 mmcmd in December 2023, fueled by the moderation in spot LNG prices and increased consumption in power, fertilizer, and industrial segments.
Internationally, the US Henry Hub gas price also witnessed a decline to $1.9 per mmBtu due to subdued domestic demand, resulting in higher inventories and a temporary halt in new LNG export plant approvals.
India’s strategic focus on boosting natural gas usage across key sectors aligns with its goal of increasing the share of natural gas in its primary energy mix from 6% to 15% by 2030.
As the country navigates through the aftermath of the Covid-19 pandemic and geopolitical tensions, FY24 is anticipated to witness record-high gas consumption, according to industry analysts.
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