Petronet sees more buyers opting for long-term LNG contracts
LNG buyers will look to sign more long-term contracts because of the high spot prices and this will help in bringing in more investment in liquefaction projects, Akshay Kumar Singh, CEO of Petronet LNG, told the India Energy Forum by Ceraweek on October 22.
Singh said that in the recent past buyers were opting for spot purchases instead of going for long-term contracts. This was causing some anxiety among developers of liquefaction projects. The more long-term contracts will help to build up more supply-side investments, he added.
In the past few months, global LNG spot prices have rallied to multi-year highs due to a rebound in demand post the easing of COVID-19 related restrictions in many countries and supply constraints.
He said that buyers were looking at signing contracts with a mix of gas and oil benchmarks. Singh added that there should be a floor and a ceiling price in the contract which will protect both buyer and sellers.
Petronet LNG is India’s biggest LNG buyer and operates two LNG import and regasification terminals.
Singh said that India will need to significantly expand its regasification capacity if the share of gas has to reach 15% of the overall energy mix by 2030. He said that at present gas accounts for 6% of the energy mix that translates to about 42mn metric tons/year of demand.
If the share reaches 15% by 2030, India’s demand will rise to about 160mn mt/yr. The domestic gas supply is expected to be around 45-50mn mt/yr by 2030. The shortfall of about 120mn mt/yr will have to be met by imported LNG, he said.
India has nearly 42mn mt/yr of regasification capacity and about 19mn mt/yr is under construction with another 9-10mn mt/yr under design stage. A significant investment in new regasification capacity will be required in India, he said.