India is back to buying spot LNG cargoes as benchmark Asian prices slumped to the lowest in a month amid demand destruction and hopes of a resolution of the Middle East conflict.
Major LNG importers in India, such as Bharat Petroleum Corporation Limited (BPCL), Gail India Ltd, and Gujarat State Petroleum Corporation Ltd (GSPC), this week purchased cargoes of LNG at prices below $16 per million British thermal units (MMBtu), anonymous trade sources familiar with the deals told Bloomberg.
These are some of the first purchases in weeks. Indian importers retreated from the spot LNG market in the early days of the war when the Asian spot prices, off which contracts are priced, surged to a multi-year high of $25 per MMBtu.
Current prices of about $15 per MMBtu have significantly eased from last month’s peak, but they are still about 50% higher compared to before the war.
The new spot purchases would deliver LNG to India between April and June, hopefully to ease the supply crunch that resulted from no LNG carrier passing through the Strait of Hormuz in the month and a half since the war began.
India relies on Qatar for 45% of its LNG supply and 20% of its LPG supply, and the tiny Gulf state is the single biggest supplier of both fuels to India.
Qatar, however, halted all LNG production on the third day of the war, on March 2, and subsequently declared force majeure on deliveries. State firm QatarEnergy has said that it would be forced to declare force majeure on a number of long-term contracts, while repairs to the Ras Laffan LNG complex, the world’s largest, could take up to five years to complete.
Over the past month, Asia’s imports of LNG have plunged to their lowest level since the Covid pandemic crashed demand in June 2020, as the Middle East war trapped supply and pushed prices to multi-year highs.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com
- India’s Cooking Gas Crisis Could Persist for Years
- European Buyers Eye Canadian LNG to Diversify Supply
- Repsol Returns to Venezuela With Ambitious Production Growth Plan
