India needs liquefied natural gas prices in Asia to nearly halve in order to significantly raise LNG imports and consumption, the top executive of the biggest Indian LNG importer said on Wednesday.
Asia’s spot LNG price is about $11 per million British thermal units (MMBtu) at present, while a major demand boost in India would come at prices between $6 and $7 per MMBtu, Akshay Kumar Singh, chief executive at Petronet Ltd, said at the India Energy Week conference, as carried by Bloomberg.
India is expected to import about 29 million tons of LNG this year, while its goal to almost double the share of gas in the energy mix to 15% will need import capacity of around 100 million tons, according to the executive.
India is in no hurry to sign long-term LNG delivery deals as the country’s price-sensitive buyers stall talks and wait for the coming supply glut to pressure sellers into agreeing to lower prices.
Some LNG buyers in India, which is much more price-sensitive than China, have been stalling negotiations for over a year, sources with knowledge of the matter tell Bloomberg.
But later this year, the LNG market is expected to tilt into oversupply and in a buyer’s market, in which India – and other price-sensitive buyers in Asia – could have the upper hand in negotiations with long-term LNG sellers.
The supply growth, mostly from the top two exporters, the United States and Qatar, is set to depress Asian spot LNG prices and Europe’s benchmark gas prices at the Dutch Title Transfer Facility (TTF).
This could start to happen only after this winter ends, because the European and Asian benchmark gas prices have jumped in recent days as the big freeze in the United States limited feedgas to LNG export plants.
Even in the summer, the price-sensitive buyers may not see much relief as Europe will have to fill storage capacity which is currently draining at the fastest pace in five years.
By Tsvetana Paraskova for Oilprice.com
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