India could witness further delays in commissioning and expansion of its floating liquefied natural gas (LNG) storage terminals with a total planned capacity of 30 million tonnes per annum (MTPA).
The world’s fifth-largest LNG importer plans to add 30 MTPA of regasification capacity in a bid to import and store larger volumes of LNG to meet rising domestic demand.
“India’s 5 MTPA Jafrabad FSRU and 6 MTPA H-Gas LNG Gateway have postponed their start-up from previous years and may see further delays due to tight supply globally for FSRU vessels and tepid local LNG demand due to recently high and volatile prices,” the International Gas Union (IGU) said in the world LNG report 2023.
In the Jafrabad (Gujarat) FSRU, Swan Energy holds 32.12 per cent stake, followed by Indian Farmers Fertilizer Cooperative (30.87 per cent), Mitsui Group (11 per cent); Gujarat Maritime Board (15 per cent) and Gujarat State Petronet (11 per cent). The Jaigarh (Maharashtra) FSRU is controlled by H-Energy Gateway.
“Worth noting is that the floating terminals in India may face delays again this year due to the tight supply of FSRU vessels and increasing competition from European markets”, the report said.
To increase regasification capacity, five new floating storage and regasification units (FSRUs) and two expansion projects are under construction in India. Of the five new terminals, three are floating-based, reflecting the South Asian market’s preference for floating terminals, it added.
In October 2022, the International Energy Agency (IEA) had pointed out that rising demand in Europe has drawn away not only flexible LNG volumes from Asia but also the limited number of FSRU vessels available for hire in the foreseeable future.
“Even projects with firm FSRUs can see their vessel commitments withdrawn. Hoegh LNG, for example, has recently terminated its 10-year FSRU charter with the much-delayed Jaigarh LNG project in India, and is now expected to redeploy the vessel to a new European FSRU terminal later this year,” it had said.
Record high prices of LNG impacted imports, particularly among the price-conscious consumers in Asia.
“While prices moderated closer to historically average levels at the start of 2023, they remain elevated with an ongoing risk of a return to 2022 conditions,” the report has projected.
The report said that the Platts Japan-Korea Marker (JKM) benchmark, which reflects cargoes delivered into Northeast Asia, averaged $33.98 per million British thermal units (mBtu) in 2022, reaching an annual daily low of $18.945 per mBtu on January 20, 2022 and hitting an annual high, also an all-time high for the benchmark, at $84.762 on March 7, 2022.
Asian demand reduced significantly in most locations, with the two fastest-growing major LNG markets in recent years, China, and India, both taking a major step back in procurement, reducing imports by 19.3 per cent Y-o-Y and 17.7 per cent Y-o-Y respectively.
China’s LNG imports stood at 63.7 million tonnes (MT) in 2022, while India imported 19.4 MT. France replaced India and emerged as the fourth-largest LNG importer in 2022.
