Spot LNG imports outstrip long-term imports

Vol 20, PW 1 (22 Sep 16) Midstream & Downstream
     

Spot imports are rapidly overtaking long-term LNG imports to India because of the difference in price - a trend likely to continue until the year-end (2016), according to PETROWATCH data.

Analysis by this report shows the ratio of spot imports to long-term imports has increased in August and the first half of September. Between August 1 and August 31 a total of 3,991,738 cubic metres LNG arrived at Dahej, Hazira and Kochi across 28 cargoes, of which only 12 were long-term deliveries while the remaining 16 were spot cargoes.

This month (September) a similar trend is emerging: four spot cargoes arrived by September 11. Long-term imports traditionally outnumber spot imports but over the past year a global glut of spot LNG has pushed prices in Asia down by more than 25% and Indian companies have seized this opportunity to renegotiate contracts.

"Spot cargoes are cheap compared to long-term contracts," says a GAIL source. Take the 152,093 cubic metre cargo for Petronet-LNG at Dahej on September 12 under its renegotiated 25-year long-term deal with RasGas and for which it paid $6.62/mmbtu.

Compare this with a 62,725 cubic metre 'parcel' cargo brought in by Ahmedabad-based Torrent at Hazira on August 30 to fuel its gas-based power stations. Torrent paid $4.89/mmbtu for this Nigerian cargo sourced through SITME.

"Long-term cargos are almost $2/mmbtu more expensive than current spot prices," we hear.

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