Our Exclusive: High spot prices dry up LNG supply: Big lesson here for India Inc – 20 Jan 2021

High spot prices have dried up LNG supplies to India.

A comparison of our daily data from two months ago with that of the import sheet as of yesterday will show that LNG imports have gone down dramatically.

Exactly two months ago, on November 20, 2020, LNG imports that we had documented come to 2411832 cubic metres

As on January 19, 2021, the total volume that we could document was just 1689523 cubic metres

As on 21 November 2020, there were 595095 cubic metres of gas meant to come in at Hazira while Dahej was meant to process 1527237 cubic metres of gas

As of yesterday, 290000 cubic metres is documented to come in at Hazira and 953793 cubic metres at Dahej

Also, the Hazira data as of yesterday is misleading, as these shipments are meant to come in only in February now, as for this entire month, there are no shipments coming in at Hazira. Two major clients, ArcelorMittal and RIL are both not bringing any cargoes. RIL is using its ethane cargoes and liquid fuels while AcerlorMittal is being supplied gas from RIL's new gas from the KG Basin.

But clearly, the point to note is that India Inc is adjusting to low LNG supply by going through the time tested way of switching to alternate fuels, like naptha or fuel oil or syngas.

India's gas demand can see big increases only if the price is low, in the range of $6-7/mmbtu whereas the price appetite is much higher in countries such as China or in Korea or Japan. India's demand for gas highly prices elastic.

The projection is that these high, winter demand-driven prices are going to settle down, and hopefully, the termianls will start importing normal volumes of LNG

But the lesson for Indian businesses is that you cannot depend on gas entirely, and that you need to have dual feed systems so that when push comes to shove, you can move easily to alternate fuels.