India grapples with LNG oversupply as Covid-19 dashes demand

By Stephen Stapczynski and Debjit Chakraborty

India’s liquefied natural gas importers are asking suppliers to defer deliveries as measures to curb the spread of the deadly Covid-19 virus have cut demand for the fuel.

At least three companies -- Indian Oil Corp., Gujarat State Petroleum Corp. and Petronet LNG Ltd. -- have asked to delay shipments slated for May and June delivery, according to traders with knowledge of the matter, who requested anonymity as the discussions are private. Inventories at import terminals in western India, such as Dahej, are near full capacity, the traders said.

The deferrals illustrate the extent of the natural gas glut in India, which has worsened over the past several weeks. While Indian firms have been accepting most contracted LNG deliveries, they have disappeared from the spot market since the virus worsened last month and shipments became too pricey.

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To make matters worse for suppliers, a cyclone in the vicinity of several import terminals in western India has also forced diversions and rearranged delivery schedules, said traders.

More deferral from India could result in an oversupply of prompt cargoes in the spot market, which will weigh on prices that have rallied to the highest seasonal level in seven years. The Indian importers have requested deferrals from several days to weeks, the traders said.