Global LNG prices stabilizing after record highs

India boosting trunk line, gas pipeline infrastructure

Petronet LNG to expand regasification capacity

India’s huge reliance on long-term natural gas contracts has helped it mostly shrug off the impact of price volatility and ensure energy security at a time when geopolitical risks emanating largely from Russia’s invasion of Ukraine have sent prices soaring globally, Petronet LNG CEO and Managing Director Akshay Kumar Singh said May 27.

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“For India, there has been no default on its long-term contracts despite the market volatility. Everybody has honored the contracts and we hope that it will continue,” Singh said during a panel discussion at the World Gas Conference 2022 in Daegu, South Korea.

Gas prices have exhibited unprecedented volatility. After ebbing to a record low of $1.70-$1.90/MMBtu in April 2020, the Asian LNG spot price jumped to as high as $84.80s/MMBtu on March 7, Singh said.

Now there is some easing and that is a good sign prices are stabilizing, Singh said.

The Platts JKM for July was assessed at $23.771/MMBtu May 27, S&P Global Commodity Insights data showed.

India’s LNG imports stand at 24 million-25 million mt/year, with Petronet LNG handling almost two-thirds of the country’s total LNG import volumes, Singh said.

Petronet LNG buys 8.5 million mt/year from RasGas via a long-term agreement and imports 1.44 million mt/year from ExxonMobil’s Gorgon project in Australia under another term deal.

As far as long-term contracts were concerned, he said the company was taking steps to extend its RasGas contract for Dahej, Gujarat, but there was ample time to do so.

Natural gas key for net-zero pathway

Demand destruction to a certain extent will likely occur because elevated natural gas prices are prompting consumers to seek other alternatives, but gas will play a key role in satiating India’s growing energy needs, Singh said.

India’s continued plan to increase the share of gas in its overall primary energy sector is “very ambitious,” Singh said, adding that the central government has decided to increase the target of natural gas’ share in the energy mix to 15% by 2030 from the current level of around 6%. That translates to a roughly four-fold rise in the country’s natural gas requirement, he said.

Currently, the country consumes about 45 million mt natural gas, of which 24 million mt is imported and the remainder is domestic gas, Singh said, adding that by 2030, the plan is for total demand to hit as high as 150 million-160 million mt.

To consume that quantity of gas, a lot of effort is being directed to strengthen the country’s infrastructure — both the trunk line and the pipeline network — he said.

India has pledged to achieve net-zero emissions by 2070.

“So, natural gas will remain a primary energy fuel for at least three-four decades in the Indian context,” Singh said.

Expansion plans

Petronet LNG, for its part, is advancing plans to expand its existing 17.5 million mt/year LNG import facility at Dahej to 22.5 million mt/year.

The company’s Dahej terminal is the world’s busiest even though capacity-wise, it is the seventh largest globally, Singh said, adding that there were plans for launching LNG facilities in the state of Odisha.

The company’s Kochi terminal operated at 21% of its 5 million mt/year capacity January-March compared with 18% in the corresponding quarter a year ago, the company said in its latest quarterly results announced May 12.

It eventually hopes to ramp up the Kochi terminal’s capacity utilization to 100%, Singh added.

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