RUS | ENG | All
Enter the email or login, that you used for registration.
If you do not remember your password, simply leave this field blank and you will receive a new, along with a link to activate.

Not registered yet?
Welcome!

2020-10-28 14:10:00

INDIA'S LNG DEMAND UP

INDIA'S LNG DEMAND UP

PLATTS - 27 Oct 2020 - Enthusiasm about the potential for boosting India's consumption of US LNG due to rising demand and lower delivered costs should be tempered by insufficient storage and cheaper coal, industry executives said Oct. 27.

The outlook expressed during the second day of the India Energy Forum by CERAWeek reflects the uncertainty about how significantly LNG can penetrate some emerging markets in Asia.

The executives from state-run gas utility major GAIL, India's biggest buyer of US LNG, and Xcoal Energy and Resources, a Pennsylvania-based coal marketing and logistics firm that sells to the Indian market, acknowledged that LNG's share of the country's overall energy mix would continue to grow, considering policy reforms favoring more gas and plans for new regasification infrastructure. India's faster rebound from the coronavirus pandemic than some other countries also helped.

What's in question is the extent and timing of the opportunity, given the alternatives buyers have.

"We can definitely bring down the prices, even with the Henry Hub maybe being a little bit higher," GAIL Chairman and Managing Director Manoj Jain said of LNG during a panel discussion at the conference, which was webcast. "That is going to help the Indian market grow."

He cautioned, however, that there was not enough storage serving the region, limiting the upside for LNG import growth during certain times of the year. He also saw a shift in favor of spot LNG buying from long-term or medium-term price contracts due to ample supplies.

"People are not having that much interest in building the storage from a commercial point of view," Jain said.

He said there is not a big enough difference in gas prices between summer and winter seasons to create the arbitrage storage providers need to justify adding new capacity.

With coal delivering to India for less than $3/MMBtu, the price is still more competitive than LNG, limiting how much coal would be phased out to meet environmental goals and how widely LNG may penetrate the market, Xcoal's CEO and chief marketing officer Ernie Thrasher said. By comparison, under favorable conditions, it could cost around $5/MMBtu to deliver US LNG to India.

"I think you'll see an evolution, albeit over time, with gas growing market share, likely to the detriment of coal," Thrasher said.

Jain said the promotion of a gas-based economy in India would mainly depend on rationalization of taxation and tariff structure for natural gas.

Opportunities explored

Still, for US liquefaction developers, India presents one of the biggest demand opportunities. S&P Global Platts Analytics forecasts the country's consumption will nearly double by 2024 from 2018 imports due to economic expansion, declining domestic reserves and the government's determination to expand the share of natural gas in the country's energy mix to 15% by 2030 from 6% now.

GAIL was a foundation customer at Cheniere Energy's Sabine Pass terminal in Louisiana, while it and other Indian buyers are being courted by developers of new US LNG terminals that are proposed to start up in the middle of this decade.

One of those developers is Tellurian, which has been talking to India's Petronet about making an investment in Tellurian's proposed Driftwood LNG project in Louisiana.

During the panel discussion with Jain and Thrasher, Tellurian CEO Meg Gentle did not address Petronet specifically, but she did describe the Indian market as one of the developer's greatest opportunities.

"We have accomplished a great feat as an overall industry to actually enable security of supply, so that consumers can actually pursue short-term contracts as they manage portions of or all of their portfolio," Gentle said.

-----


Earlier:

INDIA'S LNG DEMAND UP
2020, October, 27, 14:40:00
INDIA GAS CONSUMPTION UP
Gas accounts for little over 6pc of India’s primary energy consumption mix, which is far below the global average. New Delhi has set a target to raise this to 15pc by 2030,
INDIA'S LNG DEMAND UP
2020, October, 27, 14:35:00
INDIA, OPEC COOPERATION
Your Excellency, Prime Minister Modi, OPEC is a reliable partner of India and the great strategy you set out for your esteemed country. Long may this relationship continue to blossom.
INDIA'S LNG DEMAND UP
2020, October, 16, 12:50:00
LNG DECARBONIZATION
LNG producers are already racing to add the decarbonized label.
INDIA'S LNG DEMAND UP
2020, October, 8, 12:40:00
LNG: CHALLENGES & OPPORTUNITIES
The emergence of large-scale North American LNG exports has made it easier for low-cost US gas to reach Asia’s LNG importing markets.
INDIA'S LNG DEMAND UP
2020, October, 6, 15:30:00
INDIA'S GAS ENERGY UP
India's LNG demand for power generation has been robust this year as power plants looked to capitalize on record low LNG prices, helping boost margins at prevailing electricity prices.
All Publications »
Tags: LNG, GAS, INDIA