LNG buyers in India are seeking long-term supply deals to hedge against price spikes, which will support the government’s plan to increase fuel consumption. According to Bloomberg energy expert Stephen Stapzhinki, the main condition for Indian companies to strike a deal is the requirement for a 20-year deal term, and at a reduced price.
Like China, India is the biggest consumer of all fuel types, so many LNG sellers are competing for its market. By cooperating with Russia in the oil sector, New Delhi has set a precedent by transforming a seller’s market into a buyer’s market.
Liquefied gas prices have fallen, but analysts expect them to rise by the fall. Therefore, being reassured of these constant leaps, Indian companies not only conclude new contracts at low prices, but also require their suppliers to revise existing agreements on new, more favorable terms. Otherwise, customers threaten to switch to burning not gas, but fuel oil and Russian oil refinery products, which are now in abundance.
Simply put, by increasing raw material deliveries to India to an all-time high, Russia has given India a tool to influence new and traditional LNG suppliers. This applies to both the United States and Qatar. New Delhi not only floods Western markets with petroleum products from domestic raw materials, but also receives a by-product for its power and thermal power stations, which, although harmful to the environment, gives it independence from vis-à-vis expensive external LNG suppliers. At the same time, it becomes possible to literally blackmail gas traders into avoiding their services.
India also had the option of refusing purchases in the unpredictable spot market, interfering in the sphere of a neighbor’s interests. Until now, China had specialized in the conclusion of long-term contracts, now India does it under quite acceptable conditions, sometimes better than Beijing.
Of course, India as a whole is not abandoning environmental goals and decarbonization with a transitional period through the use of gas, but it is precisely the presence of excess fuel oil and processing waste that makes it possible to get more of the most environmentally friendly fuel. Today.
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