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Asia needs flexible LNG deals not linked to oil prices says India oil minister

December 04/2020

MOSCOW (MRC) - Asia needs flexible liquefied natural gas (LNG) contracts with no links to oil prices to reflect changes to the market as demand recovers from the impact of the coronavirus pandemic, said Reuters

Pradhan said gas buyers and sellers need to adjust to changing market dynamics after lower spot gas prices in last two years have encouraged buyers to favour short-term and spot deals instead of long-term oil-linked deals. "The LNG price determination for Asian consumers is still oil-linked, and this requires an urgent revision," Pradhan said at an International Energy Forum event.

India, the world's fourth largest liquefied natural gas importer, is aiming to raise the share of gas in its energy mix to 15% by 2030 from the current 6.3% and is investing $60 billion by 2024 to strengthen infrastructure. The country's top importer Petronet LNG is renegotiating pricing of gas bought under long-term deals with Qatar, after a spot price slump made oil-linked long-term deals unattractive.

"There is greater recognition to immediately address the rigidities in its marketing structures in LNG sector," the minister said referring to clauses like destination restriction. He said refined fuels and gas demand in India has recovered to pre-Covid levels and he hoped the country will remain a key global energy demand center.

India is doubling its natural gas grid to 34,500 kilometers and increasing annual gas import capacity to 61 million tonnes by 2022 from the current 42 million tonnes, he said.

As MRC informed earlier, ADNOC LNG has signed up to a six-year supply agreement with Vitol, the worlds largest independent energy trader, for the sale of 1.8 MMtpy of post-2022 LNG volumes and a two-year supply agreement with Total for 0.75 MMtpy of 2021 and 2022 LNG volumes.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,594,510 tonnes in the first nine months of 2020, up by 1% year on year. Only high density polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market reached 880,130 tonnes in the nine months of 2020 (calculated using the formula: production minus exports plus imports, excluding producers" inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.
Author:Anna Larionova
Tags:petroleum products, crude oil, PP, PE, neftegaz, petrochemistry.
Category:General News
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