Petronet LNG to buy super-chilled fuel in 2024 to feed India's growing demand
Petronet LNG, the country's largest importer of liquefied natural gas (LNG) in India, is looking to buy the super-chilled fuel through a long term contract starting from 2024, according to a document reviewed by Reuters.
It has issued a Request for Information (RFI) indicating an interest to buy about 1 million tonnes per annum (mtpa) of LNG for 10 years starting from 2024, with the possibility to extend, according to the February 19 document.
A request for information is a common practice to ask for written information about the capabilities of various LNG sellers to help them make more informed buying decisions.
Petronet's Director of Finance Vinod Kumar Mishra declined to comment on the RFI.
Petronet's request comes amid a trend among LNG buyers to move away from long-term contracts with fixed pricing to shorter contracts with lower volumes and more flexible terms. However, Indian companies have sought longer contracts as they expect domestic gas demand to increase.
The cargoes will be bought on a price formula linked to both Henry Hub natural gas futures in the United States and Dutch TTF gas futures and shipped on a delivered ex-ship (DES) basis, the document showed.
Indian companies typically price their LNG contracts on an oil-linked basis while some are tied to the Henry Hub, two sources familiar with LNG imports into India said. Contracts priced on a TTF basis are rare, the sources added.
Petronet is asking for suppliers to provide information related to the delivery and pricing of cargoes as well as flexibility that the suppliers can provide, including volumes and destination, the document stated.
Suppliers must respond by February 26 and Petronet will shortlist the five most competitive suppliers.
The company will analyse supply offers as well as potential LNG terminal investments if required by the suppliers.
Petronet is already in talks with several companies including U.S. based Tellurian and NextDecade Corp to buy LNG.
It currently has long-term contracts with Qatar Petroleum and Exxon Mobil Corp to lift about 10 mtpa of supply.
India wants to raise the share of gas in its energy mix to 15% by 2030 from the current 6.2% to reduce pollution, including the capital New Delhi.