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India has largely not benefited from the crash in spot LNG prices since September '14 as the country's imports dropped simultaneously.
The long-term RasGas contract accounting for 70% of India's LNG imports has turned out to be significantly expensive to spot prices and even liquid fuels. The major importer Petronet LNG's inability to offload the high cost gas from RasGas was the key reason.
"Due to the weak offtake, stock levels at LNG import terminals were on the rise for most of the past six months. This, in our view, reduced flexibility to import cheaper spot LNG," noted a research report by Nomura.The drop in spot LNG prices has stopped, and a pick-up is visible.
"The spot LNG prices have begun to recover on the back of recovery in global crude prices, which jumped from $45 to $65 per barrel," said Roman Kazmin, Editor, LNG Markets Daily with ICIS. "Egypt and Mexico have emerged as new large sources of LNG demand this summer, besides Jordan and Pakistan. Whereas, Yemen's LNG exports are down due to political unrest," he added.
Large supply additions are expected only towards end 2015 when two LNG projects commence in Australia and Angola's LNG exports resume.
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