New Delhi: India is facing rising pressure on gas costs as disruptions to global liquefied natural gas (LNG) supplies force domestic companies to pay sharply higher prices.
Amid the Iran conflict and supply concerns, Indian companies are reportedly paying their highest prices for LNG since 2022.
GAIL, GSPC buy costly LNG
State-owned GAIL India has purchased an LNG cargo for delivery in September at more than $23 per MMBtu.
Gujarat State Petroleum Corporation (GSPC) has also bought LNG for September delivery at around $23 per MMBtu.
The expensive purchases highlight the impact of tightening global supplies and strong competition for available LNG cargoes.
Why India needs more gas
Indian state-owned gas and power companies are turning to the spot LNG market to secure supplies.
One major reason is the need to maintain adequate gas availability for fertiliser companies. Natural gas is an important input in fertiliser production, making uninterrupted supplies crucial for the sector.
As a result, companies are buying LNG from the spot market even at significantly higher prices.
Qatar supplies face disruption
India usually meets a significant part of its LNG requirement through long-term contracts with Qatar, one of the world’s biggest LNG suppliers.
However, a major Qatari LNG export terminal was damaged during Iranian attacks in March.
Shipping through the Strait of Hormuz has also been severely affected, adding further pressure on LNG supplies and prices.
Europe adds to competition
India is also competing with European buyers for LNG cargoes.
European gas prices have climbed to their highest level in five months, increasing demand for LNG and making competition for available supplies stronger.
Higher international prices could increase gas procurement costs for Indian companies if supply disruptions continue.
Meanwhile, state-owned Bharat Petroleum Corporation Ltd (BPCL) has also agreed to purchase an LNG cargo from the spot market this week.
The price paid by BPCL for the cargo has not been disclosed.
