Petronet LNG, the country’s largest gas importer, said on Saturday that some of its customers have postponed imports of liquefied natural gas (LNG) due to high prices, making supplies under long-term agreements more attractive.
“Some people are reducing their purchases and rearranging loads,” Petronet LNG director AK Singh said at a news conference. High spot prices for LNG are not sustainable and India will “certainly” sign long-term deals, he said.
Petronet has signed a deal to buy 7.5 million tons per year (mtpa) of LNG from Qatar and 1.44 tons per year from Exxon’s Gorgon project in Australia.
Asian spot prices for LNG hover around $16 per million UK thermal units, while long-term supply costs are around $10/mmBtu, he said. He said India’s energy sector will cut LNG intake if prices rise by about $10/mmBtu.
India aims to increase the share of natural gas in its energy mix to 15 percent from the current 6.2 percent by 2030 to reduce its carbon footprint. The country also plans to deploy hydrogen in some sectors. Singh said hydrogen use will not affect LNG demand in the near term.
“Today, the cost of hydrogen production is very high and transportation and distribution is also a challenge. It is an emerging fuel, while LNG is an established fuel,” he said. India has allowed the use of the super-cooled gas in transportation to reduce the use of diesel.
Singh, whose company aims to set up 1,000 LNG metering stations in 4-5 years, hoped India could match the Chinese model, where its massive truck fleet is migrating from diesel to LNG.