July term cargo deliveries outstrip spot LNG

Vol 24, PW 19 (12 Aug 21) Midstream, Downstream, Renewables

Spot LNG prices were much lower than term prices last year (2020), but the exact opposite is true this year (2021), with term imports to India outstripping spot LNG cargoes in July (2021).

And the trend is likely to continue in August. Petrowatch data shows that Dahej, Hazira, Kochi and Ennore received 32 cargoes from July 1 to 31 (2021).

Eighteen were term cargoes: 16 long-term, one short-term and one medium-term. Fourteen were spot LNG cargoes.

Mundra received no cargo in July, while Dabhol was closed for the monsoon from May 6 (2021) to mid-September. In July, spot LNG prices continued their inexorable rise, crossing $12/mmbtu and reaching $15/mmbtu in August.

"I am seeing such high prices for the first time at this time of year," admits an LNG importer. "Prices are not coming down soon."

Petronet-LNG is bringing in a spot cargo this month (August) at Dahej for around $15/mmbtu, so too is IndianOil. "We are procuring a cargo in the $15/mmbtu plus range," confirms IOC.

"On August 5 (2021), even Pakistan awarded a prompt cargo tender for $15.93/mmbtu to Qatargas," another source tells us. "That is a slope of 22.13% to Brent."

LNG deals are often linked to the Brent oil price, at $44.99/barrel on August 10 (2020) but $69.04/barrel on August 9 (2021). In August last year (2020), spot LNG prices were below $3/mmbtu, mainly due to reduced demand during the pandemic.

On August 6 (2020), GSPC paid $2.61/mmbtu for a Trafigura cargo from Oman; on August 9 (2020), Reliance paid $2.04, and on August 12 (2020), IndianOil paid $2.07/mmbtu for cargoes sourced from ADNOC through Vitol. But in just a year, things have changed dramatically with the continuing after-effects of a harsh winter in China, Japan and South Korea and supply constraints to blame.

These saw the S&P Global Platts JKM industry benchmark hit $32.494/mmbtu on January 12 (2021). For a full breakdown of LNG cargo arrivals to India, with landing prices and volumes, subscribe to the LNG Dipla database from Petrowatch.com

On August 8 (2021), the JKM futures contract for September (2021) rose to $15.70/mmbtu from $14.59 on July 27 (2021). For October (2021), it stands at $16.85 against $14.53/mmbtu on July 27 (2021), and for November, it stands at $17.22/mmbtu against $14.94/mmbtu on July 27 (2021). “More long-term cargoes are coming in, not by choice,” concludes an industry source. In July, Petronet-LNG landed nine long-term cargoes, GAIL brought four long-term loads back to back under its 20-year deal with Gazprom, and IOC two. On July 27 (2021), Reliance shared a 162,002-cubic metre cargo with Hazira based steelmaker AMNS (Arcelor Mittal Nippon Steel) and Shell Energy India. On July 2 (2021), GSPC and Reliance split a 206,039-cubic metre Q-Flex cargo sourced from Qatargas for $8.64/mmbtu. Reliance also shared another 150,055-cubic metre cargo with Shell sourced by SITME from Oman LNG on July 3 (2021). On July 1 (2021), Adani-Total Gas shared a 158,051-cubic metre Total cargo from Cameron LNG at $9.45/mmbtu with AMNS and Hindustan Petroleum. For a full breakdown of LNG cargo arrivals to India, with landing prices and volumes, subscribe to the LNG Dipla database from Petrowatch.com.

July term cargo deliveries outstrip spot LNG

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