The conflict across West Asia is raging on, and the Indian markets are feeling the heat. As a direct result of the LNG supply crisis, domestic prices have risen significantly. The latest to join the list is Adani Total Gas (ATGL). It has raised prices on supplies to industrial clients, citing lower gas availability due to conflict in the Middle East, a Reuters report said. GAIL too has indicated supply curbs.
Adani Total Gas triples prices for excess consumption
As per the report, Adani Total Gas has raised prices from Tuesday for gas consumed over and above the 40 per cent daily contract quantity to 119 Indian rupees ($1.30) per standard cubic metre. Earlier prices were around 40 rupees per standard cubic meter, the report added.
The company is a joint venture of Adani Group and French oil major TotalEnergies SE. As a result of the attacks on Iran and Tehran’s retaliatory strikes, transit through the Strait of Hormuz between Iran and Oman, which carries around one-fifth of oil consumed globally as well as large quantities of liquefied natural gas, has ground to a near-halt after some vessels in the area were hit.
“Due to recent geopolitical developments impacting LNG supply routes, ATGL has received upstream gas curtailment, leading to operational constraints,” the company said.
GAIl may consider supply curbs
GAIL (India) said on Thursday it will assess curtailing supplies to natural gas customers after a force majeure notice from long-term supplier Petronet LNG due to vessel constraints amid the escalating conflict in the Middle East.
The allocation of LNG from Petronet to GAIL has been reduced to zero with effect from March 4, GAIL said, adding that the potential impact from the force majeure could not be quantified.
Petronet LNG, India’s top gas importer, on Wednesday issued a force majeure notice to its supplier, QatarEnergy, and to local buyers like GAIL and Indian Oil Corp, after its LNG tankers were unable to reach the LNG loading terminal at Ras Laffan.
Experts warn of industry-wide risks
A Goldman Sachs report stated that roughly 80 million tonnes per year of LNG exports, largely from Qatar, move through the strait, and a sustained disruption could sharply tighten global gas markets. The report said that in such a scenario, European gas benchmark prices could potentially surge to levels seen during the 2022 energy crisis.
A Crisil report stated that Asian spot LNG prices have risen to $24–25/MMBtu from $10/MMBtu, and a further surge would widen India’s current account deficit and stoke inflation. It will also impact India Inc’s profits, given the critical role of energy across sectors, the report added.