Liquefied Natural Gas (LNG) pricing and marketing strategies need a re-look in the light of the prevailing post-Covid-19 scenarios according to the Minister for Petroleum and Natural Gas, Dharmendra Pradhan.

Addressing the 7th IEF-IGU Ministerial Gas Forum, Pradhan said, “The growth of short term and spot contracts is a defining feature of the LNG market. Several surveys indicate that buyers expect that close to 60 per cent of their portfolio will consist of spot and short-term volume, a marked increase, compared to 40 per cent last year. Due to Covid-19 demand contraction, LNG is available abundantly on spot basis at much lower than contract basis price.”

Fix pricing structure

He said, “LNG price determination for Asian consumers is still oil-linked and this requires urgent revision. The steep fall in LNG price will help offset demand decline, potentially leading to additional coal-to-gas switching. There is greater recognition to immediately address the rigidity in the marketing structure in the LNG sector. It is expected that LNG will become more competitive compared to even pipeline gas supply in some markets.”

Noting that the right price would ensure speedier adoption of natural gas in the country, Pradhan said, “India is a highly price sensitive market. The key users of natural gas seek immediate realignment of re-gassified LNG price given the prevailing market conditions.”

Gujarat model

Pradhan also reflected on the Gujarat model for natural gas adoption and said, “Happy to note that the Gujarat model is being used as a case study. We are adapting the Gujarat model across the country to transform India into a gas-based economy. Gujarat has set an example with 25 per cent share of natural gas in primary energy mix compared to 6.3 per cent at national level.”

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