Africa To Offer LNG Import Diversity
BMI View: Petronet is moving to reduce its dependence on Qatari LNG imports, with 80% of the company's current contracted volumes coming from the Rasgas facility. While other Indian LNG importers have looked to Russia, Australia and particularly the US, Petronet is reportedly negotiating with Angola, Mozambique and Indonesia. Due to the considerable LNG potential of Africa and India's strong gas demand profile, we believe East Africa in particular will be crucial to India's plans to diversify LNG imports.
According to a report published by Indian news group, Daily News & Analysis (dna), Petronet LNG is looking to increase the diversity of its liquefied natural gas (LNG) imports due to its over-reliance on Qatar as a supplier. Around 80% of India's contracted LNG imports for 2014 are due to be delivered from the Rasgas LNG facility in Qatar, with the entire volume imported by Petronet LNG. The Rasgas contracts are also not due to expire until 2028 and 2030 respectively, leaving Petronet with a legacy 7.5mn tonne per annum (tpa) (10.2bcm) supply from Qatar. A significant increase in contracted LNG volumes into India is not expected until around 2016, when imports from the US are scheduled to begin. However, it has been GAIL and not Petronet that has lead the diversification trend through its contracts signed with the US and Russia.
Petronet has also been criticised for the single contract it has signed that will enable partial diversification from Qatar. LNG imports from Australia's Gorgon project are due to begin delivery in 2014, though it still remains unclear as to whether the LNG facility will be completed in time to ship this year. Furthermore, the 20-year supply deal with Gorgon arranged a price of US$14.5 per million British thermal unit (/mnBTU), a relatively lofty figure compared to LNG linked to the US Henry Hub benchmark and 2013 landed LNG prices in India of around US$13.75/mnBTU.
|Petronet Remains Dependent On Qatar|
|Indian Contracted LNG Deliveries 2012-2020 (mn tonnes per annum)|