Although no storage objectives have yet been negotiated, Petronet is constructing extra tanks at its LNG import terminals to hold the imported fuel and is working on a floating import facility in the eastern state of Odisha, Mishra added. India explores strategic LNG stockpile to avert future shortages.
Long-Term Deals Last year’s shortfall is also encouraging Indian buyers to search for long-term supply arrangements, which secures delivery to clients at more consistent pricing, Mishra added. Some of these transactions are anticipated to be signed in 2023, he added.
India is contemplating constructing a strategic reserve of liquefied natural gas to defend against any price spikes or supply shortages following last year’s energy crisis, according to a senior executive of the nation’s main importer.
The government has “proposed we should have additional storage capacity for LNG so that when prices are lower we should store, and supply when there is a crisis,” Vinod Kumar Mishra, financial director of Petronet LNG Ltd., said in an interview.
“We have witnessed the situation and it was tough for the administration also to secure supply.” India restricted LNG imports last year after Russia’s invasion of Ukraine upended the market and drove prices skyrocketing. Although Prime Minister Narendra Modi’s government plans to more than increase the amount of gas in the country’s energy mix, high costs have been a hurdle for certain companies.
More countries are trying to establish emergency stocks of LNG, comparable to the oil industry’s strategic reserves, as the super-chilled fuel becomes a more essential piece of the global energy mix. Japan one of the world’s biggest purchasers announced last year that it is exploring a similar approach.
While no storage targets have yet been discussed, Petronet is building new tanks at its Liquefied natural gas (LNG) import terminals to accommodate the imported fuel and is working on a floating import facility in the eastern state of Odisha, Mishra
Petronet is in negotiations with Qatar to renegotiate its 7.5 million tons-a-year deal that ends in 2028. The New Delhi-based business is trying to increase the deal by as much as 1 million tonnes, according to Mishra. Nonetheless, a recent decline in spot prices down approximately 80% from August is boosting interest in purchases for fast delivery, said Mishra.
Costs would need to decrease to roughly $6 to $7 per million British thermal units to boost purchases, he noted. The Asian spot benchmark ended over $12 on Friday, according to dealers. “India’s market is price-sensitive,” added Mishra. “It is not reliant on one form of fuel. It may switch to any fuel that is cheaper.” ©2023 Bloomberg L.P.
