Page 6 - AsianOil Week 02 2021

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IOC reportedly returns to spot LNG market

PROJECTS & STATE-RUN Indian Oil Corp. (IOC) has world – including in Australia, Malaysia and
COMPANIES reportedly returned to the spot liquefied natu- Qatar – have exacerbated the situation.
ral gas (LNG) market despite prices surging to S&P Global Platts reported on January 11
record highs in recent weeks. that the JKM benchmark had hit an all-time
The company has launched a tender for high of $21.45 per mmBtu ($593.31 per 1,000
an LNG cargo to be delivered on February cubic metres) on January 8, while the West India
13, Reuters reported on January 11 citing Marker (WIM) benchmark set its own record
unnamed sources. The sources added that of $17.925 per mmBtu ($495.81 per 1,000 cubic
the tender, which is set to close on Jan- metres).
uary 13, was the first since IOC bought Soaring prices led one Indian LNG importer
a cargo for February 21 delivery at more to predict that throughput levels at some of the
than $13 per mmBtu ($359.58 per 1,000 country’s terminals could fall by 10%-12% in the
cubic metres). first quarter of 2021. The source told Platts that
The Indian refiner is looking for LNG at a imports could drop to 5.5-5.7mn tonnes from
time of increased regional demand, which has 6.5mn tonnes in the final quarter of last year.
been stoked by plummeting winter tempera- “The quick change in the market dynamics
tures. Beijing, for example, has recorded its cold- has taken Indian LNG buyers by surprise. A lot
est weather since 1966. of Indian buyers can’t afford to pay these prices.
Purchasers across East Asia have been We will see demand destruction across various
forced to ramp up their imports as they have sectors,” Platts quoted an unnamed senior LNG
found existing LNG purchases and gas stor- industry official as saying. “Whatever little avail-
ages to be insufficient. At the same time, ability there is in the global spot market, China
unplanned production outages around the is taking those cargoes.”™

Indian oil demand

shrank in 2020

PERFORMANCE ALTHOUGH India’s oil demand shrank in local lockdown measures to contain the corona-
2020 for the first time in more than two decades, virus (COVID-19) pandemic. Various quaran-
the country’s demand for liquid petroleum gas tines saw the refiners slash runs in the middle
(LPG) climbed to new highs. of the year, only raising them amid recovering
Demand for all oil products – including die- demand as 2020 drew to a close.
sel, gasoline and jet fuel – contracted by 10.8% Indian fuel demand recorded its fourth
year on year to 193.4mn tonnes, according to straight month of gains in December, reach-
figures from the Petroleum Planning & Analysis ing an 11-month high of 18.59mn tonnes. This
Cell (PPAC). The volume decline represented was up from the 17.86mn tonnes consumed in
the first annual contraction since 1999, Bloomb- November, but still down 2% from the 18.94mn
erg reported, citing its own calculations. The fig- tonnes recorded in December 2020.
ure also represented the lowest country’s level of “I think gasoline will come back this year with
demand in five years. more people using private vehicles,” state-run
Oil product demand collapsed in March after refiner Hindustan Petroleum Corporation Ltd’s
the country brought in widespread national and (HPCL) chairman, Mukesh Kumar Surana, told

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