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LNG demand in India may taper off-II: Spot market highly price sensitive
May 12: The fact that India is a sensitive market for LNG is evident from the drop in trading volumes in Petronet LNG Ltd's Dahej terminal.
8Spot volumes plunged 80% when LNG prices shot up
8Clearly, when spot volumes go off, LNG is substituted by other forms of fuel, such as naptha, fuel oil and petroleum coke.
8The Indian LNG market is going to get very competitive with the commissioning of the Mundra (2017) and Ennore (2018) terminals, both of which poses a risk to PLNG’s monopoly and re-gas margins.
8Other planned terminals such as Dhamra, Hazira and Kakinada will intensify competition too.
8The key risks for PLL at his point in time are:
8Prolonged gap between long-term RasGas and spot-LNG prices could result in deferment/lowering of term LNG volumes.
8High gas prices may lower demand for R-LNG, thus making it unviable for PLNG to source more long term supplies.
8Increase in domestic gas production and start of other LNG terminals in the country could lead to lower utilisation for PLNG.
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