Standard Post with Image

With Spot LNG Prices Reeling Low, Long term Agreement Turns a Bad Dream for Indian Players

News

Indian Oil Corporation (IOC), the country's largest refiner and fuel retailer, will not enter into long-term price contracts with liquefied natural gas (LNG) suppliers, drawing lessons from the fiasco where staterun Petronet LNG has been forced to purchase expensive LNG to honour an old contract but struggles to sell it further to consumers.

Source:  ET

SNP Insights

With almost 60% less price of LNG at spot market compared to long term agreement, procurer like Petronet are facing the heat. Pertaining to fact that gas consumer are preferring to switch over to liquid fuel due to drop in oil prices, signing of long-term  LNG agreement poses huge risk in terms of buyer availability & diminished profitability. Hence it would be interesting to see, fate of long term LNG agreement in future as spot market LNG prices, keep on declining.

Source: SNP Infra Research