LNG

European buyers are shying away from signing long-term offtake contracts for US LNG, making it harder for new export projects to secure financing and move towards construction.

The TTF needs to price higher at around €57/MWh for the balance of 2025– if European buyers want to succeed in attracting flexible LNG cargoes, as inventories are depleting fast. Reduced Norwegian pipeline gas flows could propel up TTF prices, analysts warn, as Europe lost its ability to further minimise power-sector gas demand.

India is poised to snap up big parts of the substantial volume of uncontracted LNG from the Middle East. Buying interest is on the rise as the Indian government allows utilities to blend LNG with domestically produced gas in a bid to make it more affordable for power generation, compared with coal.

Watch out for uncontracted LNG cargoes, seems to be the motto of Indian commodity traders and large utilities. Looking ahead, Rystad’s Kaushal Ramesh, Vice President Gas & LNG Research, expects savvy buyers to secure large parts of the uncontracted LNG production from Qatar, Oman and potentially Iran – at favourable terms.

“The nation is well-positioned to attract aggressive targeting from Middle Eastern producers and offtakers,” he said, noting nearly 100 million tons per annum (mtpa) of Middle East LNG will remain uncontracted by 2035.”

Flexible, low-cost supply preferred

Some potential pitfalls should, however, be taken into consideration: A key issue is Indian buyers’ history of renegotiating or even abandoning near-complete deals, which creates uncertainty for suppliers.

In Ramesh’s view, “this preference for flexibility and cost-effectiveness over long-term commitments highlights India's focus on securing the best prices for its consumers in a volatile global market – but it could limit LNG growth prospects.”

Delays at infrastructure build-out hampers the development of India’s overall gas and power gen sector. Regasification terminals remain concentrated in the western part of the country, and efforts to expand the gas pipeline network to other regions have been inconsistent.

“Slow progress is due to regulatory hurdles, challenges in securing investments, difficult terrain, and competing priorities,” he criticised, “as India channels significant resources into renewable energy development alongside its gas infrastructure.”

Domestic production can’t meet demand

Come 2040, India’s total gas consumption is forecast to double to almost 114 billion cubic metres (bcm) and despite a 51 percent jump in domestic production to 36.7 bcm by 2025, this will not suffice to meet India’s growing energy hunger. The Asian powerhouse and most populous nation will hence heavily rely on imports to meet its future energy needs.

Long-term contracts, extending way into the 2030s and beyond, help shield India from global price fluctuations and ensure a steady stream of cargoes shipped to Indian shores. Through these LNG offtake accords, India does not only strengthen its energy security but also facilitates a swift exit from more emission-intensive fuels like crude oil, mazut and thermal coal.

Coal still king in India, at least for now

India’s heavy reliance on coal has become apparent during the summer 2024 heatwaves, which temporarily propelled up coal-burn to meet peak power demand. Natural gas, on the other hand, currently accounts for just 2 percent of the country’s power mix – and in fact, coal-generated power is not projected to start falling this side of 2040.

Though gas-burn is unlikely to drive LNG imports, analysts at Oslo-based Rystad Energy believe “the sector could still see growth, however, depending on future policies to promote coal-to-gas switching or introduce carbon pricing.”

Aug 22 (LNGJ) - The results of Australia's North West Shelf LNG tender for cargoes loading in September, October and November indicate "a steep contango building into the traditionally high-demand winter season," analysts said.

This prompted some buyers in Japan to purchase cargoes for October at prices significantly above levels around $10.70/MMBtu seen in September.

Russia's gas export monopoly Gazprom has urged the Kremlin to block changes to the gas export law that would allow Rosneft to export gas from the Pechora LNG project in northern Russia, claiming the bill "will strengthen the bargaining position of potential foreign buyers of Russian gas."

A flurry of LNG regas terminals has sprung up in China, mostly used for importing spot cargoes, but analysts see a trend towards medium-term contracts as "buyers need to sign new LNG contracts for delivery in the early 2020s, if not sooner."

British Columbia supports LNG export projects as a "once in a generation" opportunity, according to Rose Klukas, Kitimat's economic development officer; but the clock is ticking as falling gas prices in Asia could close that window of opportunity.