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Event Overview

Natural gas is fast emerging preferred fuel globally. Given the rise in global energy demand, the market for LNG was projected to expand by 50% during 2015-2020. Currently, India is the 4th largest LNG market in the world, importing 18.57 MMTPA in 2016-17, a Y-o-Y increase of 2.5%. The drop in LNG prices coupled with new regasification capacity and expanding pipeline infrastructure will boost the LNG demand over the next 3-5 years. Additionally, GoI has introduced a number of policy reforms to boost upstream investments to bring gas-on-gas competition between domestic gas and LNG in the longer-term.

India’s LNG demand: India has surpassed South Korea as the second-biggest buyer of spot and short-term LNG cargoes after 65% price decline in almost two years. It has spurred demand for natural gas from fertilizer producers to power plants. India is expected to double its LNG imports over the next four years to 45 MMTPA, driven by the revival of gas-based power generation, CGD expansion and low LNG prices. The prevailing global LNG glut could drive Asian Spot prices to below 10% to Brent in 2017 against 11-12% in 2016. Also, the Indian government has been actively promoting the usage of natural gas as a preferred fuel in the country. It plans to increase the share of gas in energy mix to 15% from the current 6.5%, which is substantially lower when compared to the world average of 24%.

Spot, Medium and Long-Term trade: The short-term LNG has witnessed a significant growth, accounted for 26% (65.9 MT) of total gross traded LNG in 2015. Despite a decline in LNG price differentials across market, the short-term trade increased by 4.1MT over 2014 primarily due to commissioning of new LNG plants and emergence of several new importers.

The drivers behind the success of spot trade are:

  • LNG contracts with destination flexibility, facilitating diversions to higher priced markets
  • Increase in the number of exporters and importers enhanced the complexity of the industry and introduced new business dynamics.

LNG pricing: LNG prices across the markets began to converge in 2015 as various factors applied downward pressure on prices. Natural gas prices in North America are largely set at trading hubs, the most important of which is Henry Hub in Louisiana. Generally, oil-indexed contracts have a 3-6 month time lag against the crude oil price, LNG import prices remained reasonably steady through the end of 2014 in Asian Market, with Japanese LNG import price holding at US$15/MMBtu. However, on the back of low crude oil prices; average Japanese import prices dropped more than US$6/MMBtu in 2015, with December prices landing at US$8.13-US$8/MMBtu. Lower oil prices have also decreased the spread between oil-linked and US LNG contracts in the near-term. However, the low US gas prices and downside market fundamentals risks may force US LNG players to offer gas at reduced price to buyers over the next few years.

LNG Price Outlook2020

Latest Happenings

  • Oil consumption is estimated to expand at a CAGR of 3.3 per cent during FY2008–16E to reach 4.0 mbpd by 2016
  • Due to the expected strong growth in demand, India’s dependency on oil imports is likely to increase further
  • Rapid economic growth is leading to greater outputs, which in turn is increasing the demand of oil for production and transportation
  • With rising income levels, demand for automobile is estimated to increase
  • According to “India LNG Market Forecast & Opportunities, 2025”, the total opportunity for RLNG in India is projected to increase from an estimated 52.34 mmscmd in 2016 to 305.10 mmscmd by 2025, registering a CAGR of more than 21% during 2016 – 2025.

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Key Highlights

  • Meet the Biggest visionaries, leaders & stakeholders of the LNG industry
  • Discover the opportunities for LNG to stimulate economic development
  • How to Leverage the Gap between the buyers and sellers
  • Evaluate the LNG Infrastructure and Technology advancement
  • Know about the LNG regasification technology for performance optimization
  • Understand the dimensions & directions of the LNG Industry considering today’s and tomorrow’s geopolitical scenario

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