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Investments in LNG not looking lucrative at this point of time: Petronet LNG

Our Bureau New Delhi | Updated on August 18, 2020

Prabhat Singh, Managing Director and CEO of Petronet LNG Limited   -  Bloomberg

Gas prices expected to remain lower in the near future

The investments in the Liquefied Natural Gas (LNG) market are not looking very lucrative, according to Prabhat Singh, Managing Director and CEO of Petronet LNG Limited.

He was responding to a query on the status of the deal between Petronet LNG Limited (PLL) and US-based LNG developer Tellurian Inc.

“We are exploring the market. But one thing is sure that investments as such are not looking lucrative at this point of time. To that extent, if you are getting a molecule floating on the water which is very cheap, which we are getting at this point of time, so those are the options which are on top priority today and we are working around that,” Singh told journalists.

Earlier this year, a deal was renewed between PLL and Tellurian to finalise an investment in Tellurian’s Driftwood export project in Louisiana, USA. This deal is said to be relooked in light of the fall in global natural gas and crude oil prices.

Pact with Tellurian

PLL and Tellurian had signed a non-binding memorandum of understanding under which PLL would buy 5 million tonne per annum LNG from Tellurian’s Driftwood project. PLL was also expected to invest $2.5 billion for an 18 per cent equity stake in the $28-billion Driftwood LNG terminal.

Commenting on the price outlook for LNG, Singh said, “The time has come now that producers have to come to the consumer’s level of thought. The priority of producers is to place the molecule in the market. Price comes secondary and therefore most of the guys are looking for a daily pricing benchmark which is a dream come true for consumers.”

According to Singh, LNG prices in the spot market are hovering close to $3 per million British thermal units (mBtu). Under longer term contracts, the prices are around $4.5-5.5 per mBtu.

“In my opinion, the prices are expected to remain in this range...The days of $10 per mBtu gas price are over now,” he said.

Singh estimates that spot LNG price would easily remain below $6 per mBtu for the rest of the current financial year.

Published on August 18, 2020

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