India Looks To Lock In Long-Term LNG Deals

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  • India’s largest natural gas importers a looking into long-term supply deals with the exporters of liquefied natural gas.
  • India is planning to significantly increase the share of LNG in its energy mix, and so wants to ensure it is protected against price spikes.
  • Last year, when LNG spot prices surged after Russia’s invasion of Ukraine, India was forced to withdraw from the spot market.

Major Indian natural gas importers are discussing long-term supply deals with the biggest LNG exporting countries to lock in future supply and avoid volatility and uncertainty in case of spot price spikes, traders and executives tell Bloomberg.

India plans to significantly increase its natural gas consumption as it looks to boost its share in the energy mix. But the country and its LNG importers are particularly sensitive to surging spot LNG prices and often retreat from the spot market when prices jump.

Such was the case last year when high spot LNG prices priced out many Asian buyers as Europe bid up for supply and became the primary destination of spot LNG cargoes. For most of 2022, India – alongside other countries in South Asia such as Bangladesh and Thailand – withdrew from the spot market due to the record high prices.

In India, LNG imports fell by 15.2% in 2022, but the total import costs soared by 44.5% due to high LNG prices, the Institute for Energy Economics & Financial Analysis said in a report in February.

This year, the slump in spot LNG prices has encouraged price-sensitive buyers India, Pakistan, and Bangladesh to return to the market looking for cargoes.

But it looks like Indian buyers are not willing to take chances on the spot market for years to come.

According to Bloomberg’s sources, Petronet LNG, GAIL India, and Indian Oil Corporation are holding discussions with LNG exporters from the United States, Qatar, and the United Arab Emirates (UAE) for supply deals of 20 years.

GAIL India, the biggest natural gas company in the country, is even reportedly looking to buy an interest in an LNG export project in the United States.

Petronet LNG is in talks with Qatar to secure additional long-term volumes and is also in discussions with several other LNG suppliers, executives at the company told Bloomberg.

Petronet LNG’s chief executive Akshay Kumar Singh, told Bloomberg earlier this month, “The lesson learned by the consumers is that they can’t run the business based on spot.”


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