Home / Industry / Energy /  India’s LNG imports seen at multi-year lows in August: S&P Global

NEW DELHI: LNG imports by India likely hovered near multi-year lows in August while natural gas inflows so far this year are estimated have declined more than 10% on year, said S&P Global quoting sources, citing the impact of shrinking global supplies and high prices.

India’s August LNG imports were only around 1.45 million tonne, the lowest since at least 2018, compared with 1.84 million tonne in July, according to shipping data from S&P Global Commodity Insights.

S&P Global said, “Buyers in the country, which meets nearly half of its annual LNG demand through imports, haven’t awarded most of their buy-tenders for spot cargoes this year and have neither made an outright spot purchase since July."

“The most recent buy-tenders awarded were by GAIL and GSPC concluded in late-July for August and September deliveries, respectively. The only other tenders awarded in the past month by GAIL were swap arrangements for its existing US FOB contracts in exchange for India-delivered cargoes", S&P Global said quoting sources.

Weak spot demand has significantly reduced India’s import of LNG.

Official data for August LNG imports will likely be released by the Petroleum Planning and Analysis Cell later this month.

Indian buyers attributed their unwillingness to purchase expensive LNG spot cargoes to their inability to pass on costs to industrial and residential customers, as well as lower domestic gas prices due to existing price ceilings.

“In 2022, we expect LNG imports to decline by 13% from 2021 and average just below 30 Bcm/year," said Ayush Agarwal, LNG analyst at S&P Global. “For the remainder of the year, we expect LNG imports to average at 81 mcm/d, 4 mcm/d below last year’s levels. We believe there is still some downside risk to our present forecast."

The PPAC data for the April-July period showed LNG imports fell 7.9% on the year to 9.97 Bcm.

“Demand destruction has already happened in price-sensitive sectors like power and refining, where users can easily switch to cheaper alternate fuels. However, these prolonged levels of high prices have started to affect demand in other industrial sectors as well, where switching is a cost and time-intensive process," Agarwal said.

The Platts JKM for October was assessed at $62.77/MMBtu as of 5 September, S&P Global data showed. Asian spot prices have more than doubled since the beginning of the year, with the LNG West India marker assessed lower at $58.275/MMBtu.

With India LNG prices remaining over $4/MMBtu lower than delivered prices in Northeast Asia and Europe, suppliers have been pushing spot volumes to destinations where buyers are willing to pay a price premium.

Buyers in India are looking to sign term contracts to meet growing demand and reduce their spot exposure.

“Companies don’t have many options other than rationing or optimizing their current term supplies to meet the demand. Indian importers like GSPC awarded last outright buy tenders around $35/MMBtu. GAIL is leveraging its US contracts to meet domestic demand," Agarwal said.

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