Import volumes fell with global spot LNG prices climbing to record highs amid low stocks, high demand and limited supply of fuel.
India’s import of liquefied natural gas (LNG) recorded a drop of 13.2% year-on-year (y-o-y) to 1.9 million tonnes (MT), or 2,517.5 million standard cubic meter (mscm) in September, according to a recent note published by Credit Suisse. With this, LNG import in April-September stood at 11.8 MT, marginally lower than 11.9 MT recorded in the corresponding quarter a year ago.
Import volumes fell with global spot LNG prices climbing to record highs amid low stocks, high demand and limited supply of fuel. Domestic natural gas consumption had increased 10.1% y-o-y to 26,660 mscm in the April-August period and demand figures for September are not available yet.
In the April-August period, LNG import volumes had inched up 0.7% on a y-o-y basis to 13,033 mscm. However, the value of imports in the same timeframe had increased 68% y-o-y to $4.2 billion. Asian spot LNG rates had climbed from $6.9/million British thermal unit (mbtu) at the beginning of the fiscal to $17.7/mbtu at August end. By September end, it had even crossed $25/mbtu. In April-August, 2019 LNG import was 13,618 mscm and the value of the import was $3.9 billion. Total domestic consumption in the corresponding period in FY20 was 26,666 mscm.
The drop in LNG imports coincides with gas production ramping up at the difficult fields of Reliance Industries and BP’s ultra-deep-water KG-D6 Block in the Krishna Godavari basin and ONGC’s U1B deep-water gas located in the KG-DWN 98/2 block on the east coast. Though the ceiling price for gas to be produced from these difficult fields has been raised by 69% to $6.13/mBtu, it remains much lower than imported LNG rates.
Import dependency of natural gas, thanks to rising LNG prices and higher domestic production, has dropped from 54% in April-August, 2020 to 49% in the corresponding quarter this year.
Low LNG import “will continue to remain an overhang on Dahej’s utilization until gas demand growth exceeds the new domestic gas supply from Reliance and ONGC (which could take another 2-3 years),” analysts at Credit Suisse noted. The total capacity of operational LNG import terminals is around 40 MT per annum (MTPA). Petronet LNG’s Dahej terminal, the largest among them with 17.5 MTPA capacity, was operating at 93% utilisation in September, against the 109% recorded in the corresponding month in the previous year.