India and others are scrambling as LNG spot prices are projected to be at $20 by January. China is projected to have winter shortages for several years into the future. Seems like finding investors for low cost LNG projects should be pretty easy amid these challenges. Owning part of the source in low-cost projects is a good way to hedge against these escalating prices.
Soaring international LNG prices hurt Indian customers
By Mitul Thakkar, ET Bureau | 26 Nov, 2013, 04.26AM IST
NEW DELHI: Indian consumers, facing a severe shortage of gas, suffered another blow as the price of liquefied natural gas (LNG) rose to $16-$18 per unit, four times the cost of domestic supply, making it difficult for importers such as Shell and Petronet to find customers for costly cargoes.
Customers who were banking on imported LNG from the spot market are shifting to grid power or alternative liquid fuels such as naphtha and furnace oil to keep their
manufacturing costs in control amidst high inflation in the country. Natural gas had earlier replaced the relatively more polluting and costly liquid fuels.
"This year, LNG prices are rising faster than last winter season. Also, rupee depreciated by 10-12% in the last one year and it is discouraging for natural gas consumers to go for imported fuel. It is only
fertiliser producers whose costs are largely compensated by the government that are purchasing LNG at such high prices," said an executive with one of the public sector units engaged in LNG trade.
Analysts said prices may rise to $20 by January. To some extent, the increase in prices is seasonal as demand rises in winter for heating purpose. "This time LNG prices are firming up early since commissioning of some of the liquefaction plants is delayed while crude prices have also not eased," said a top official of one of the LNG terminals operating on the West coast. He said prices may firm up further if there is a cold wave in other consuming regions such as Europe, Japan, China and Korea.
India has to compete with world's largest importers like Japan, South Korea and China to get favourable terms in the Asian LNG market. In 2012-13, India imported 10.9 million tonnes of LNG, including almost 20% cargo
from the spot market. From mid-November, country's largest natural gas transporter Gail revised its regasified LNG prices to $18 per mmbtu as against $15.5 during July and August."
http://economictimes.indiatimes.com/news/news-by-industry/energy/oil-gas/soaring-international-lng-prices-hurt-indian-customers/articleshow/26381300.cms
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