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Over 50% drop in global LNG prices to spur demand

Mumbai: An over 50% fall in gas prices globally is expected to lead a demand revival in India’s factories, refineries, power, and petrochemicals units, industry officials said.

Anticipating an increase in demand, liquefied natural gas (LNG) importers Gail India, Gujarat State Petroleum Corporation Ltd, Petronet LNG and Indian Oil Corporation (IOCL) among others, are contracting for more spot LNG cargoes, according to industry sources.

Currently gas prices are hovering around $13-14 per million metric British thermal unit (mmbtu) and the industry is confident the current prices would prevail, or come down further, in the coming quarters. A year ago, the prices were around $30-35 per mmbtu.

GAIL, the largest gas transmission pipeline player in the country, has placed an order for three LNG cargoes in the spot market, said a company official. Gail declined comment.

“A cool off in LNG prices is helping Gail run its petchem plants in Pata (UP) and Vijaipur (MP) at full capacity now. Since last July-August, the plants were operating at 40% capacity,” said a senior company official on the condition of anonymity.

Indian Oil Corporation Ltd (IOCL) and Gujarat State Petroleum Corporation (GSPC) have also placed orders for two-three LNG cargoes, according to industry officials. The companies did not respond to an email query till press time.

“We are seeing increased enquiries and interest from the industry on availability of gas. Companies are floating tenders to procure spot LNG as a certain comfort level is coming in at $13-14/ mmbtu,” said another industry official on the condition of anonymity.

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