India’s gas marketing companies have informed industrial customers they would receive lower gas supply, industry sources told Reuters, after Qatar announced on Monday it would halt LNG production due to attacks on its liquefaction facilities.
QatarEnergy, the state firm of the world’s second-largest LNG exporter, on Monday announced that “Due to military attacks on QatarEnergy’s operating facilities in Ras Laffan Industrial City and Mesaieed Industrial City in the State of Qatar, QatarEnergy has ceased production of liquefied natural gas (LNG) and associated products.”
India, the world’s fourth-largest LNG importer, depends heavily on LNG cargoes from the Middle East—it is a top buyer of ADNOC gas and a major customer of Qatar’s.
However, the de facto halted tanker traffic via the crucial Strait of Hormuz has created uncertainty about UAE supply, while the suspended output in Qatar is tightening the market.
India’s biggest LNG importer Petronet LNG Ltd late on Monday told the top gas marketer GAIL (India) and other firms that supply would be reduced. GAIL and state-held Indian Oil Corporation have, in turn, told their customers that gas supply would be reduced by between 10% and 30%, according to Reuters’ sources.
GAIl, Petronet, and IndianOil now plan to issue tenders for spot LNG supply after term supply looks increasingly uncertain, two of the sources told Reuters.
Earlier this year, India, a price sensitive buyer of LNG, was holding off on signing long-term LNG delivery deals.
India needs liquefied natural gas prices in Asia to nearly halve in order to significantly raise LNG imports and consumption, Akshay Kumar Singh, chief executive at Petronet Ltd, said at the end of January.
A month later, gas prices in Asia and in Europe soared to levels not seen since 2022, due to the production and tanker traffic disruptions in the Middle East and the Strait of Hormuz, where about 20% of global LNG supply transits every day.
By Charles Kennedy for Oilprice.com
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