According to reports from The Hindu BusinessLine, GAIL's chairman Deepak Gupta warned that liquefied natural gas prices exceeding $20 per million British thermal units (mmBtu) are negatively impacting demand in India. The chairman made these remarks during the Gastech conference in Bangkok, highlighting the current challenges facing India's natural gas sector. As per Business Standard, Asia's spot prices have surged to nearly $30 per MMBtu from a pre-war range around $10 per MMBtu, with the conflict preventing Qatar and the United Arab Emirates from exporting most of their LNG via the Strait of Hormuz. The chairman emphasized that "the prices have hit through the roof ... and that is definitely impacting the demand insofar as India is concerned because there are a lot of sectors which are price sensitive."
As reported by The Hindu BusinessLine, GAIL holds the position as India's top natural gas distributor by market share. The company's chairman's comments carry significant weight given the organization's dominant position in the country's natural gas distribution network. According to Business Standard, both GAIL and PetroChina, China's top LNG importer, have deployed their trading teams to scour for alternative cargoes to replace Qatari and Emirati supplies since the war broke out. The warning comes at a time when India is increasingly relying on LNG imports to meet its growing energy demands, making the chairman's assessment particularly relevant for the country's energy transition plans.
According to Business Standard, the $20/mmBtu price threshold represents a significant cost barrier for natural gas consumption in India, with the chairman noting that "there are many industries which switch over to different fuels in case gas is not viable for them." However, both GAIL and PCI executives expect the West Asia conflict to have a temporary impact on demand in their countries, with consumption to rebound once prices fall and global supply recovers. GAIL's Gupta said India had to limit gas consumption initially but resumed supplies to almost 90% to 95% as it ramped up its trading capability to buy LNG from elsewhere. In China, PCI's Luo expects demand from gas-fired power plants to rebound once LNG prices return to a "normal" range of $7 to $9 per MMBtu, citing strong growth in electricity consumption even as LNG imports have fallen.
As reported by Business Standard, Shell estimates the world has lost about 36 million tons of LNG from the West Asia region so far this year, with the conflict preventing Qatar and the United Arab Emirates from exporting most of their LNG via the Strait of Hormuz, where a fifth of global supplies used to pass. The chairman expressed optimism about future recovery, stating "We are hoping that all this is very short term, and in the coming days, in mid-term and long-term, things will become normal." He added that there may be about 150 million to 200 million tons of LNG coming online in the next four to five years which could cool prices. The chairman noted that "the sectors like the power sector in our country, like the various industries, they are going to go for more gas ... because it's a cleaner fuel."
