BackIndia is hit by a surprise glut of LNG
This is a stark reversal to months of shortages due to tight global supply and missed deliveries from suppliers.
PremiumIndia is suddenly facing a glut of liquefied natural gas as the nation’s customers don’t want to pay for high prices and are rushing to alternatives.
Storage tanks at the Dahej and Hazira LNG import terminals in India are near maximum capacity, which means scheduled deliveries may need to be delayed, according to traders with knowledge of the matter.
India is the latest nation to be hit by a surprise glut of LNG -- a stark reversal to months of shortages due to tight global supply and missed deliveries from suppliers. A drop in LNG shipments to India could push down global gas prices, providing relief for customers plagued by surging inflation and sky-high power bills.
Industrial gas customers in India have been buying far less gas from LNG terminals due to the high spot prices, resulting in the buildup in storage tanks, the traders said. The nation was forced to purchase its costliest LNG shipment ever in September.
Industrial customers are instead buying cheaper fuel such as oil products and domestically produced gas, said the traders, who requested anonymity as the information isn’t public.
Lower demand due to higher prices has led to a reduction in usage at Petronet LNG Ltd.’s biggest import terminal at Dahej in western India, Chief Executive Officer Akshay Kumar Singh said during a conference call on Thursday. Shell Plc, which operates Hazira, declined to comment.
India’s energy giants have several long-term LNG contracts that require delivery to the nation, making it challenging to significantly curb imports when domestic demand falters. LNG delivered to India is mostly used in industrial applications rather than power generation, and it competes against fuel oil instead of coal.
October deliveries were down by more than 20% compared to the same time last year, according to ship-tracking data, as importers halted spot purchases.
While Asian LNG spot rates are trading well above normal for this time of year, prices are down about 65% from August. A further drop in LNG prices could see Indian industrial gas demand bounce back and drain the LNG inventories, the traders said.
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This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.
