Model of LNG tanker is seen in this illustration taken May 19, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
MUMBAI: India’s liquefied natural gas (LNG) importers are holding up some deals spanning decades as they push to lock in cheaper prices, hoping that a surge in supply will tilt negotiations in their favour.
Major buyers, including Gail India Ltd and Bharat Petroleum Corp have been pushing for lower prices and more flexible long-term contracts, leaving discussions with LNG producers stalled for more than a year, according to sources.
That approach could be rewarded if prices drop as new projects from the United States to Qatar come online.
The talks will be a key topic at India Energy Week, which kicks off today and will be attended by major producers including Abu Dhabi National Oil Co and TotalEnergies SE.
These companies have invested billions of dollars in massive export plants and new supply on the bet that demand in Asia, including India, will rise for years as the region powers fast-growing industries and transitions away from dirtier fossil fuels.
For years, India had a goal of gas making up 15% of its energy mix by 2030, roughly double the current level.
However, the country has struggled to progress toward the target due in part to LNG being too expensive for consumers.
Annual imports have essentially plateaued since 2020, with Russia’s 2022 invasion of Ukraine upending the market and sending prices to an all-time high.
That dynamic could begin to shift.
Global LNG capacity is set to rise by about 50% by the end of the decade – the biggest build-out in the industry’s history.
Indian buyers are looking for long-term supply contracts from around 2028, near when that wave peaks, according to the sources, who asked not to be named as they aren’t authorised to speak with the media.
Gail and BPCL didn’t respond to a request for comment.
India’s LNG imports have a “meaningful upside from the upcoming supply wave,” said Kesher Sumeet, a senior LNG analyst at Energy Aspects.
“The city gas sector, where structural expansion is fastest, will lead consumption growth along with non-fertiliser industrial demand, as affordable LNG becomes available.”
Imports will also be supported by expanding refining and petrochemical capacity, which is expected to absorb additional LNG supply as domestic gas production growth remains weak.
Even so, Indian buyers are well covered in the near term after a flurry of contracts signed in 2024 and 2025, leaving little urgency to lock in additional long-term deals, the sources said. — Bloomberg
