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India’s LNG imports seen surge 15% as utilities snap up cheap cargoes

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India keeps snapping up distressed cargoes for cheap. Coal-to-gas switching allows Indian power generators to absorb a large share of…

Ship-tracking data from Refinitiv Eikon shows that India imported some 2.36 million tonnes of LNG in February, which surpassed an earlier record of 2.3 million tons set in October.

The low spot prices are creating some downstream demand in India, especially from the city-gas sector and for power generation. Some cargoes headed for China have been diverted to India, and a few bargain-hunting Indian buyers have issued tenders for spot cargoes - some even for several months.

Reliance Industries is understood to have issued a tender for five cargoes for April to June delivery, while Gujarat State Petroleum Corp (GSPC) sought nine cargoes for February to April.

However, demand-side growth in some opportunistic buying markets like India is threatened by the spread of the virus, analysts at Energy Aspects cautioned. India has just declared 114 cases, which is up from three at the start of the month.

Infrastructure bottlenecks

Though power producers are eager to switch fuel and take advantage of cheap LNG imports, there are some infrastructure constraints that hamper a quick and substantial shift to gas generation. The start-up of Mundra LNG terminal and H-Energy’s Jaigarh terminal as well as the timing of the completion of GAIL’s Kochi-Mangaluru pipeline are expected to greatly determine Indian LNG demand growth in 2020.

According to our LNG Market Tracker, H-Energy is preparing to start commercial operations at its FSRU-based LNG terminal at Jaigarh Port in the second quarter this year. Movements of the chartered FSRU GDF Suez Cape Ann have been tracked off the Maharashtrian coast, and the vessel is about to approach the port of Jaigad, where it will nominal LNG capacity 4 million tonnes per annum (mtpa).

H-Energy, through its subsidiary H-Energy Gas Marketing, will source LNG from Malaysia to supply regasified methane to downstream customers via a 60km feeder pipeline to the national gas grid at Dabhol. The developer is also building a 635km pipeline connecting Jaigarh to energy-hungry Mangalore – dubbed India’s ‘Silicon Valley’ – which is scheduled for completion by 2023.

The Indian government is backing power plant conversions from coal to cleaner-burning natural gas as well as renewables, in a bid to improve air quality in the country’s big cities and reign in respiratory health problems.


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