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India’s top gas importers see soaring LNG prices spurring long-term contracts

In Asia, LNG prices fell to record lows below $ 2 per million British thermal units (mmBtu) as gas demand was curbed by a coronavirus blockade in May last year.


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Earlier this month, LNG prices soared to record highs of over $ 56 per mmBtu.

CEOs of India’s top gas importers consider securing long-term contracts with minimum and maximum price options to hedge extreme volatility on Friday as liquefied natural gas (LNG) prices soar He said he was supposed to. AK Singh, CEO of Petronet LNG, told the Indian Energy Forum at the industry event CERA Week. ..

Spot LNG prices in Asia fell to record lows below $ 2 per million British thermal units (mmBtu) in May last year when the coronavirus blockade pushed gas demand down. Earlier this month, they soared to record highs of over $ 56 per mmBtu. Since then, prices have returned to around $ 30 per mmBtu, up almost 500% from last year.

“Every dark cloud has a silver lining, and this (high price) situation has led people to sign longer-term contracts, which may be the best thing for the gas economy around the world,” he said. Said. Lower spot prices hurt investment in gas-producing assets and led to supply constraints when demand recovered as the global economy recovered after the pandemic. Low prices also encouraged buyers to take advantage of spot prices.

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India’s gas demand is expected to increase as Prime Minister Narendra Modi has set a goal of increasing the share of gas in India’s energy mix from the current 6.2% to 15% by 2030.

According to Valery, global spot and short-term LNG contracts now account for more than 40% of total volume and have doubled in the last decade. This is partly due to Asian buyers hesitating to make long-term commitments amid uncertainties in energy transitions and rising supply liquidity. Chow, who is responsible for Wood Mackenzie’s Asian gas and LNG research.

According to Petronet, the cost of long-term LNG is currently between $ 11 and $ 12 per million dollars in British thermal units, compared to a spot price of around $ 40 / mmBtu. Mr Shin said recent fluctuations in gas prices have led buyers to consider associating long-term gas contracts with a combination of crude oil and gas indexes. By setting lower and upper prices in long-term contracts, Shin said, both buyers and sellers are protected from volatility.

India’s gas demand is expected to increase as Prime Minister Narendra Modi has set a goal of increasing the share of gas in India’s energy mix from the current 6.2% to 15% by 2030. To achieve this goal, Shin said, a new LNG terminal with a capacity of 70-75 million tonnes (mtpa) per year will need to be built in the country. This is because imports of supercooled gas could increase from the current 26 mtpa to 120 mtpa. reIndia’s current LNG import capacity is 42mtpa. He said a new terminal with a capacity of 19 mtpa is under construction while the plant with a total capacity of 9-10 mtpa is in the design stage.

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India’s top gas importers see soaring LNG prices spurring long-term contracts

Source link India’s top gas importers see soaring LNG prices spurring long-term contracts

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