Global spot LNG prices have come down, says Petronet
Company eyes more long-term deals spanning 10 to 15 yrs
Global spot liquefied natural gas (LNG) prices have come down after rallying to unprecedented highs, according to Petronet LNG’S Managing Director and CEO Akshay Kumar Singh, a boost to India’s efforts to build a gas-based economy.
The sudden spurt in spot LNG prices had a muted impact on the company since most of its contracts are long term and linked to crude oil, Singh told Business Standard after the company announced its third-quarter results.
“The price of spot LNG had increased to exorbitant levels which has never been seen in the past. But if we go by future prices being indicated from April onwards, rates are coming in the affordable range of around $5 to $6 per million British thermal units. We think that LNG prices in the international market will stabilise in the near future, maybe a month or two, and that will definitely improve utilisations of all the LNG terminals in India,” he said.
Responding to a query on whether it affected buying patterns for Petronet’s consumers,
Singh said, “Some effect was there but we have a lot of longterm contracts which were not impacted with these prices since they are mostly linked to crude prices. Only some spot and short-term contracts were impacted in January, but now it has normalised.”
Petronet LNG is in the business of regasifying LNG at its import terminals for Indian consumers. It is the largest LNG importer of the country and was formed as a joint venture of public sector undertaking companies.
Currently, Petronet LNG operates two regasification terminals in the country. Its flagship 17.5 million tonne per
annum (mtpa) terminal in Dahej, Gujarat, meets around 40 per cent of the country’s gas demand. Singh said the Dahej terminal operated at 97.3 per cent of its nameplate capacity and the firm plans to expand its capacity to 22.5 mtpa.
The other terminal is of 5 mpta in Kochi which has had a rough start in the absence of pipeline networks that were delayed. The lack of consumers pulled down the capacity utilisation. There has been some relief with the long-awaited commissioning of Kochimangalore pipeline for this project, he said. The Kochi terminal’s capacity utilisation is expected to rise to 30 per cent later in 2021. But the actual utilisation of this project will happen once more pipeline network is in place.
According to Singh, the Mangalore line has been completed and all the consumers in that sector (Kochi to Mangalore) will be supplied gas gradually. However, one major portion of the pipeline network that connects the terminal to Bengaluru and the national gas grid is expected to be completed in a year.
“We expect that very soon the line will be connected to Bengaluru and once that is connected, then we expect capacity utilisation at our Kochi terminal to jump to 80 or 100 per cent,” he said.
On the company’s plan to forge more long-term contracts, Singh said, “Gas consumption is expected to increase substantially and Petronet LNG will play a major role in the form of importing more LNG and developing terminals.”
“The conventional longterm deal which used to be 25 years does not exist anymore in the international market. People are talking about fiveto 10- year deals. There are a lot of flexibilities even in these deals. We are looking at capitalising such opportunities to get the best deal for our country."