Asia needs flexible liquefied natural gas (LNG) contracts with no links to oil prices to reflect changes to the market as demand recovers from the impact of the coronavirus pandemic, India’s oil minister Dharmendra Pradhan said on Thursday.
Pradhan said gas buyers and sellers need to adjust to changing market dynamics after lower spot gas prices in last two years have encouraged buyers to favour short-term and spot deals instead of long-term oil-linked deals.
“The LNG price determination for Asian consumers is still oil-linked, and this requires an urgent revision,” Pradhan said at an International Energy Forum event.
India, the world’s fourth largest liquefied natural gas importer, is aiming to raise the share of gas in its energy mix to 15% by 2030 from the current 6.3% and is investing $60 billion by 2024 to strengthen infrastructure.
The country’s top importer Petronet LNG is renegotiating pricing of gas bought under long-term deals with Qatar, after a spot price slump made oil-linked long-term deals unattractive.
“There is greater recognition to immediately address the rigidities in its marketing structures in LNG sector,” the minister said referring to clauses like destination restriction.
{{/usCountry}}“There is greater recognition to immediately address the rigidities in its marketing structures in LNG sector,” the minister said referring to clauses like destination restriction.
{{/usCountry}}He said refined fuels and gas demand in India has recovered to pre-Covid levels and he hoped the country will remain a key global energy demand center.
India is doubling its natural gas grid to 34,500 kilometers and increasing annual gas import capacity to 61 million tonnes by 2022 from the current 42 million tonnes, he said.