Spot LNG price takes a dive below term LNG
This might be the year of long-term LNG contracts for India, but spot LNG importers are also a happy lot as spot LNG prices fall below long-term LNG prices.
And the price difference has widened by almost $2/mmbtu! "India might see more than 40 cargo arrivals in June (2024)," says a GAIL source. "Everybody is happy."
On June 4 (2024), LNG tanker Raahi brought in a long-term Qatari cargo for Petronet-LNG at Dahej, which paid $11.72/mmbtu for the 136,122 cubic metre cargo. Four days earlier, on May 31 (2024), Torrent paid $9.36/mmbtu for a 158,198-cubic metre spot Angolan delivery at Dahej from Glencore.
Similarly, GSPC landed a 135,835-cubic metre Adnoc cargo sourced through Vitol at Dahej for $9.30/mmbtu on June 1 (2024). Compare this with a 136,065-cubic metre long-term cargo brought by LNG tanker Disha for Petronet-LNG from Qatar at Dahej on May 29 (2024).
Petronet-LNG sourced this term cargo for $11.69/mmbtu. "Qatar term LNG is almost $12/mmbtu, and most of the spot LNG cargoes are below $10/mmbtu," adds an IndianOil source.
"Situations change fast in the LNG industry; in 2022, when spot LNG prices crossed the $50/mmbtu mark, everyone was full of praise for term LNG; now everyone wants a slice of the spot LNG market." Adding to the optimism are expectations that large LNG volumes will soon hit the global market.
"Large supply volumes are expected to come in from the US, Qatar and Canada," Gurpreet Chugh, managing director of consultant ICF India, said while moderating a panel discussion at an LNG conference in Delhi on May 30 (2024). "Some estimates suggest that up to 150m to 200m tonnes may hit the market in the next seven to ten years; that is a lot."
Over the past year, Indian buyers have signed seven long-term LNG contracts, a fact highlighted by Adani-Total chief Satinder Pal Singh at the same LNG conference on May 30 (2024). As we reported then, Singh believes Indian buyers should commit to long-term LNG if the country is ever to achieve its longstanding dream of a gas-based economy.