Confusion over India's demand for gas-I: Where is it going from here?
Jun 28: For reference purposes, the website carries here a fresh set of independent projections of gas demand in India going up to the year 2024. 8What has been noticed in India so far is that there is an inverse relationship between LNG import prices and gas consumption. 8An important finding is that if LNG imports continue to be primarily based on oil-linked contracts, low gas prices would presumably lag low oil prices – and given that oil products are key competitors to gas in several industry sectors such as petrochemicals and refineries -- this will limit the potential for gas to grow across the Indian economy, even at low LNG import prices. 8But some adjustments are now happening. The recent equalization (to nearly 50:50) in the proportions of short-term/spot to long-term contracted LNG imported into India from around 20:80 prior to 2014, indicates a preference for flexibility in supply terms among Indian LNG buyers, as does the domestic gas pricing reform which includes three hub-based price benchmarks in its formula. 8This implies that structural changes on the supply side of the global LNG market, such as the rise of LNG portfolio players who organise their sales strategies around contract length mix and price formation to better suit their buyers, will also play a key role in direct relation to global gas prices as a determinant of future gas demand in India. Click on Reports for more.