-
High spot LNG prices a concern for Indian Gas companies: JM Financial
The sustained high prices of spot liquefied natural gas (LNG) remain a key concern for Indian gas companies, as it could impact domestic demand and affect the volumes and margins of city gas distribution (CGD) firms, according to a report by JM Financial.
The report highlighted that Gujarat Gas (GGas), in particular, faces higher exposure, with 20-30 per cent dependency on spot LNG purchases.
It said “Sustained high spot LNG price is a key concern for all gas companies in India as it could impact domestic LNG demand, and volume/margins of CGD companies”.
The report stated that spot LNG has been trading at around 18 per cent of Brent crude prices, significantly higher than the historical average of 12 per cent before the Russia-Ukraine conflict.
This prolonged surge in prices poses a challenge for Indian gas firms that rely on spot market purchases to meet their supply needs.
Global oil and gas companies foresee the risk of sustained high spot LNG prices continuing into 2025. The tight market conditions have been exacerbated by supply disruptions and rising demand from key markets.
Despite a 19 per cent year-on-year decline in Europe’s LNG demand to 93 million metric tons (mmt) in 2024, recent months have witnessed a resurgence in European imports.
The report noted that the drop in annual demand was primarily due to sluggish industrial growth, reduced gas-fired power generation, and increased competition for LNG volumes from other regions.
Share This
