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India’s import of liquefied natural gas (LNG) in the July-September quarter was the lowest since FY18 as record high prices and shrinking global spot supplies impacted inbound shipments.
Even a quarter-wise comparison reveals that LNG imports during Q2 FY23 were the second-lowest in the last two years. Similarly, a month-wise analysis shows inbound shipments during September 2022 being the lowest in the last seven months.
According to the data published by the Petroleum Planning and analysis Cell (PPAC), LNG imports stood at 7,305 million standard Cubic Meters (MSCM) during Q2 FY23. For the month of September, imports were at 2,365 MSCM.
Imports during the July-September period were the lowest since the same period in FY18, when inbound shipments of LNG had hit 6,541 MSCM.
Similarly, a quarter wise import assessment of LNG was the second lowest since Q1 FY21 when imports stood at 7,279 MSCM. The lowest shipments during the review period was in Q4 FY22 (at 6,745 MSCM).
On a month-on-month basis, LNG imports during September were slightly lower compared to August 2022 (2,369 MSCM). Inbound shipments of gas in September was the lowest since February this year (2,024 MSCM).
High prices
Trade sources said that spot purchases have been impacted since July this year as European gas companies stocked up the key commodity for the winter months with Russian gas supply drying up due to the geopolitical tension.
Besides, high prices for both imported LNG and domestic gas squeezed demand in the more price-sensitive sectors of the economy. LNG is mainly used by fertiliser manufacturers and city gas distribution (CGD) companies.
According to a September 7 report by brokerage ICICI Securities, spot LNG prices in Asia touched a record high of $70 per mBtu last week, a remarkable 3x increase in 3 months, with a price of $23.5 per mbtu as of June 10, 2022.
Crisil in an October 4 report said that over the past 12 months, the average price of LNG contracts, benchmarked against crude oil prices, rose around 45 per cent to $14.5-15.0 per mbtu, while spot LNG prices have surged by around 150 per cent to $38-40 per mbtu.
Demand destruction
India’s natural gas consumption in September stood at 5,157 MSCM, down 0.8 per cent M-o-M and down 9 per cent y-o-y. The International Energy Agency (IEA), too, has projected India’s natural gas consumption to decline 1.5 per cent y-o-y in 2022 as high prices are adversely impacting demand.
Earlier this month, CRISIL Ratings Director, Naveen Vaidyanathan, said: “Elevated gas prices are expected to reduce demand for industrial PNG by 10-12 per cent this fiscal, as price-sensitive industrial consumers switch to alternative fuels such as propane and fuel oil.”
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