Three LNG importers from India have issued spot buy tenders to cover new requirements from their domestic end-users between April and May, according to market sources in the Pacific basin.
The increase in LNG demand is a result of India’s domestic fertiliser sector requiring additional natural gas for production during the monsoon season that typically runs from May to September.
Major producer Fertilisers And Chemicals Travancore (FACT) has already opened a buy tender requesting 3.2m MMBtu of regasified LNG between 6 May and 22 August to be delivered to the Kochi terminal and the grid (see LNG Market Intelligence Solution for full details). This is equivalent to one cargo of LNG.
The end-user expects to award the tender in April.
“Current spot LNG prices are now more favourable for [Indian] end-users who are paying above $6.50/MMBtu for domestic gas,” one source said.
India has imported 4.36m tonnes of LNG so far this year, up from 4.07m tonnes over the same period last year, according to LNG Edge.
State-owned gas distributor GAIL is seeking a cargo with a flexible delivery window in April to either the Dahej or Dabhol terminals on the west coast of India. Offers are due by 22 March.
State-owned Gujarat State Petroleum Corp has requested a cargo to be delivered to either Dahej or Hazira between late April and early May. Offers are due by 23 March.
State-run Petronet LNG also has demand for one cargo and has specified a delivery window at either Dahej or its Kochi terminal between 25-30 April. The tender closes on 24 March.
It is unclear whether Petronet’s latest buying interest is a result of incremental demand from its domestic end-users or is related to a four-cargo strip tender that it concluded earlier than expected.
Petronet LNG awarded that strip tender at prices ranging from mid-10% to high 11% of the Brent crude oil benchmark, market sources said. That tender closed on 22 February, but offers had to be valid until 25 March.
“The validity period was longer than usual buy tenders, because Petronet had to use those offers to negotiate with the downstream customers,” one portfolio trader in Asia said.
Delivery windows for the strip tender are scheduled in April, June, September and November. Anglo-Dutch portfolio major Shell won two delivery windows, with the first cargo due in April, market sources said. A European trader won the other two cargoes, but its identity could not be confirmed.
“The April and November pricing was close to 12% because those months are considered peak demand periods. The June and September cargoes were in the mid-10% range,” one source said. This would place the spot price for April in the low $6.00s/MMBtu DES.
Buyers and sellers in the Pacific basin have indicated that pricing for May is in the mid-$5.00s/MMBtu DES. The price trend for June is less clear as discussions have not started. email@example.com
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