India’s biggest gas importer Petronet LNG said on Saturday said some of its customers have deferred imports of spot liquefied natural gas (LNG) due to high prices, which have made supplies under long-term deals more attractive.
“Some people are tapering purchases and rescheduling cargoes,” A.K. Singh, managing director of Petronet LNG said at a news conference.
High spot LNG prices are not sustainable and India will ‘definitely’ sign long term deals, he said.
Petronet has a deal to buy 7.5 million tonnes per year (mtpa) of LNG from Qatar and 1.44 mtpa from Exxon’s Gorgon project in Australia.
Asian spot LNG prices are hovering at about $16 per million British thermal units, while supplies under long-term deals are costing about $10/mmBtu, he said.
He said the Indian power sector reduces LNG intakes if prices rise about $10/mmBtu.
India aims to raise the share of natural gas in its energy mix to 15% by 2030 from the current 6.2% to cut its carbon footprint. The country also plans to use of hydrogen in some sectors.
Singh said in the short-run hydrogen use will not impact LNG demand.
“Today, the cost of hydrogen production is very high and also transportation and distribution is a challenge. .it is an emerging fuel whereas LNG is an established fuel,” he said.
India has allowed use of the super cooled gas in transportation to cut the use of diesel.
Singh, whose company aims to set up 1,000 LNG dispensing stations in 4-5 years, hoped India would be able to emulate China’s model, where its vast truck fleet is migrating to LNG from diesel.
Source: Reuters (Reporting by Nidhi Verma; Editing by Kim Coghill)