There has been increased turmoil in the global energy market amid the Iran war. Its direct impact is being seen on the prices of Liquefied Natural Gas (LNG) in India. Due to the impact of supply of LNG, Indian companies are having to pay the highest prices in many years to buy gas.
According to the information, this is said to be the most expensive purchase of LNG in India after the year 2022.
GAIL and GSPC bought LNG at expensive rates
State gas company GAIL India has purchased a consignment of LNG for delivery in September. For this the company has paid more than $23 per MMBtu.
At the same time, Gujarat State Petroleum Corporation (GSPC) has also paid around $ 23 per MMBtu for the LNG received in September.
Maintaining gas supply is a challenge for the fertilizer sector.
India's government gas and power companies are currently purchasing LNG from the spot market. The main reason for this is to provide continuous supply of gas to fertilizer companies.
The government is emphasizing on promoting fertilizer production, which requires natural gas. In such a situation, companies have to buy LNG even at higher prices.
Qatar supply also affected
India usually buys LNG through long-term agreements with Qatar. Qatar is among the world's major LNG supplier countries.
But due to damage to Qatar's large LNG export terminal during Iranian attacks and disruption of ship movement through the Strait of Hormuz, pressure on global gas supply has increased.
Competition for purchasing LNG from Europe increased
India is also facing tough competition from European countries in purchasing LNG. Gas prices in Europe have reached a multi-month high, increasing demand for LNG there.
This increased demand is also affecting Asian buyers and gas prices are going up.
BPCL also bought consignment of LNG
India's state energy company BPCL has also recently signed an agreement to buy LNG from the spot market. However, information about the price paid by the company for this deal has not been revealed yet.
Amidst global tensions and supply constraints, controlling energy costs is becoming a big challenge for India.