India was set to import record volumes of LNG last month in an effort to take advantage of its price hitting all-time lows, due to the virus outbreak dampening demand in China.
The country was expected to import about 2.36 mill tonnes in February, shiptracking data from Refinitiv Eikon showed, which would exceed India’s LNG imports in October of about 2.3 mill tonnes, the previous highest monthly total.
India’s annual LNG imports were expected to rise by 10 -15% this year, said Poorna Rajendran of consultancy firm FGE, talking with Reuters.
“The low spot prices are creating some downstream demand especially from the city-gas sector,” one source told Reuters.
Asian spot LNG prices have fallen to a record low after China’s top LNG buyer, PetroChina, declared force majeure on some LNG deliveries following the coronavirus outbreak.
As a result, some of the cargoes bound for China were diverted to India and also some Indian buyers issued tenders for spot cargoes, traders said. Some were even looking for cargoes for several months.
For instance, Reliance Industries issued a tender for five cargoes for April to June delivery, while Gujarat State Petroleum Corp (GSPC) sought nine cargoes for February to April, traders said.
The potential spike in demand also likely prompted Emirates National Oil Company (ENOC) to issue a tender seeking eight cargoes for delivery into India between April to November, traders said.
However, infrastructure constraints will limit Indian buyers’ LNG purchases, FGE’s Rajendran said. “This remained a key bottleneck in 2019 when low spot prices struggled to boost India’s LNG demand significantly. The start-up of Mundra LNG terminal and H-Energy’s Jaigarh terminal and the completion of GAIL’s Kochi-Mangaluru pipeline will determine Indian LNG demand growth in 2020,” he stressed.
India wants to raise the proportion of gas used in its energy mix as it battles against high levels of pollution in many big cities and is working to expand the country’s pipeline network and build new terminals.