Easing LNG Prices to Boost Indian Gas Importers' Performance

According to Nomura, easing LNG prices are benefiting India's leading gas importers who are expected to show strong bottom line in coming months.

The Japanese brokerage said in its global market research report that GAIL is benefiting from lower natural gas price in the domestic market and imports as well as the recent strength in the petrochemical product prices, Press Trust of India reported Thursday.

"After having performed weakest in the past year, GAIL looks set to stage a strong comeback," Nomura said.

Given the backdrop of low global LNG prices, India insisted on renegotiating its long term contract with Qatar. In December, the two parties signed a revised deal. The revised formula bases the price on a three-month average figure of Brent crude oil, replacing a five-year average of a basket of crude imported by Japan, with a rider that Petronet buys an additional 1 million tons of LNG annually. Qatar also waived off a $1.5 billion penalty against India for lifting less gas than agreed. Cost of LNG that India imports from Qatar has slipped below $5 per mmBtu post signing of revised long-term deal.

Nomura also has a positive view on Petronet LNG. The company is expected to benefit from lower prices and expansion at Dahej LNG import terminal. Capacity expansion of Dahej LNG terminal is expected from 10 mtpa to 15 mtpa by end of 2016. Further, a firm plan is in place to augment another 2.5 mtpa capacity at Dahej.

India’s oil ministry expects country’s LNG import terminal capacity to double in next six years amid rising demand for imported fuel.

According to a document released by the ministry on June 3, country’s LNG terminal capacity will likely rise to 47.5 million tonne per annum (mtpa) by 2022 from the current 21.3 mtpa as existing terminals expand capacity and new ones get commissioned.