Indian LNG importers may still need to bid for uncommitted LNG cargoes from the Atlantic despite a ceasefire agreed between the US and Iran.
Indian LNG importers are issuing a series of spot LNG tenders this week as global prices softened with weaker demand emerging out of Europe and other parts of Asia, which in turn may lead to shippers diverting their uncommitted Atlantic cargoes to India.
Indian state-run refiner IOC has raised a total of two spot LNG tenders for prompt deliveries in April, and another for May. And fellow state-run firms BPCL, HPCL and GSPC are seeking cargoes for early May — marking a return of Indian LNG importer purchasing interest, after firms have been cautious with bookings since the Iran war began.
Recent bookings were heard to be made at $17-18/mn Btu, mostly originating from Nigeria and Angola, that had previously supplied the Atlantic basin. But west African-loaded LNG has seen an open inter-basin arbitrage to Asia at a lower basis premium, as the voyage from Angola's Soyo LNG to India's Dahej would take 17 days travelling at a speed of 16 knots, compared with 26 days for a US Gulf Coast to Dahej voyage.
Indian LNG importers had booked about five LNG cargoes over March and April, with supplies coming from Nigeria and Oman, paying about $18-22/mn Btu for prompt deliveries after raising more than 15 LNG tenders, some of which were ultimately not awarded as Indian buyers remained price-sensitive.
A decline in spot LNG prices following the ceasefire agreement between Iran and US may encourage India to raise more prompt LNG tenders. The LNG price for delivery to west India in the first half of May fell to $15.10/mn Btu today — marking a new low since 3 March when it stood at $15.02/mn Btu.
But transit of loaded LNG carriers through the strait of Hormuz is yet to resume, indicating Indian buyers may have to outbid European buyers to secure uncommitted Atlantic basin cargoes.
The Indian des price for the second half of May stood at an outright discount of 11¢/mn Btu to the northwest European des price for the first half of the same month as of Tuesday, indicating little financial incentive for shippers of uncommitted Atlantic cargoes to divert their cargoes to India away from Europe. This then suggests Indian importers may have to raise their bids at least 11¢/mn Btu higher, and by an additional $1.14/mn Btu to account for extra freight costs to deliver a cargo to India over northwest Europe.
Only one LNG carrier has diverted to India away from Europe recently — the 175,000m³ LNG Finima II has signalled for arrival at India's 17.5mn t/yr Dahej import terminal on 20 April, after previously indicating for France's 12.4mn t/yr Dunkirk facility, ship-tracking data from Kpler show.
The supply disruption has changed India's LNG import dynamics since the war broke. But the pool has largely remained restricted to Oman and west Africa.
Supplies from the US have not materialised much for LNG, as has been the case for LPG as Indian state-run oil marketing companies secured a total 800,000t of LPG from the US, Russia, Australia and other countries, the government said on 26 March. This is 40pc of India's monthly LPG imports.
LPG and LNG are two competing fuels for Indian households with the former having the widest circulation in the country and also 60pc dependent on imports.
The spot LNG requirements currently have largely been to meet demand for fertilisers ahead of the sowing season, domestic household gas needs, and to some extent for industries.
New Delhi has initiated a full or partial curtailment of gas supplies to petrochemical plants as well as gas-fired power plants.
