Southeast Asia's procurement plans marches on even as India considers alternative fuels

A rise in global LNG prices has shown diverging behavior in LNG procurement with Southeast Asian countries continuing with their buying plans whereas Indian purchasing moves gingerly given its sensitivity to higher prices.

Global LNG prices have been on a boil as market participants assessed the risk of the Hamas-Israel conflict on LNG and as traders and portfolio companies optimize heading into the winter season.

Platts assessed JKM, the price for LNG cargoes delivered to Northeast Asia, for December at $17.550/MMBtu Oct. 26, S&P Global Commodity Insights data showed. The average for November was $14.475/MMBtu.

Market sources said Thailand's PTT was planning to issue an LNG purchase tender early October. Although the tender has not been issued, the market expects the Thai oil-and-gas major to issue a new tender for December given the country's depleting gas fields and growing domestic demand.

In late August, the Electricity Generating Authority of Thailand closed a tender for 1.2 million mt of LNG for delivery over 2024-2027. The tender was awarded to BP for 2024 and PetroChina for 2025-2027.

EGAT was also reportedly in the process of preparing a new 15-year term tender, according to industry sources.

Hin Kong Power, a joint venture owned by Gulf Energy Development and Ratch Group, announced early September a deal with Gunvor to procure 500,000 mt/year of LNG.

Other LNG import license holders in Thailand were also heard planning their first imports.

The prevailing opinion in Thailand, with regards to buying LNG, is to compare and evaluate the best option between term contracts and spot deals. Buyers are also required to procure cargoes below JKM, following a guideline issued by Thailand's Energy Policy and Planning Office.

As for the Philippines, with a coal power moratorium in place and production at Malampaya gas field declining rapidly, LNG demand is seen rising. San Miguel Corporation was heard to have imported a total of five cargoes, including its first in April to fuel the 1,200-MW Ilijan gas-fired power plant.

Another power producer, First Gen Corporation, issued a new LNG purchase tender Oct. 25 for a second cargo for delivery over Nov. 25-Dec. 25. The import will be supplied to First Gen's existing gas-fired power plants in the Batangas province, according to the tender document.

Market sources expect Vietnam's PV Gas to issue a term contract following media reports in early October that the state-owned gas corporation's Thi Vai LNG Terminal was ready for commercial operation. New LNG imports will be supplied to downstream industrial customers and some existing power generation units.

India compares alternative fuels

The divergence in buying activity between India, Pakistan and Bangladesh is due to a heavy reliance on natural gas in Bangladesh and Pakistan with more flexibility to meet power demand through coal in India.

Tender activity from Indian LNG buyers became muted as end-users preferred using cheaper alternative fuels.

Industrial users of natural gas have been comparing propane prices with that of LNG, while refineries are considering using alternatives like naphtha and fuel oil.

"Demand in India is generally zero for winter because of the pricing difference and it was the case even when prices were $4.50-$5/MMBtu for the summer and winter periods, and now the difference is huge between the two seasons," an India-based importer said.

Market sources said the price for these alternative fuels range between $13/MMBtu and $14.50/MMBtu.

Indian market participants also said the availability of Regasified LNG and domestically produced gas weighed on new demand for spot LNG cargoes.

Indian market sources expect a new domestic gas tender for 4 million-5 million cu m/day to be issued soon, which has tempered demand for imported cargoes for the winter period.

Market participants in India have tapped the RLNG market to meet their prompt gas demand. Torrent Power and Gujarat State Petroleum Corporation concluded RLNG tenders to meet their demand for October and November-December, respectively. Market participants expect RLNG prices to remain in the $14-$16/MMBtu range for November.

Bangladesh, Pakistan marches on with procurement

Bangladesh's Rupantarita Prakrtik Gas Company Limited on Oct. 22 concluded a tender for Nov. 12-13 delivery with the lowest offer from Vitol at near $17.50/MMBtu, market sources said. This was a week after the company received the lowest offer of $19.50/MMBtu for the same delivery window. The company issued a new LNG buy tender for Dec. 12-13 delivery, closing Oct. 29 with validity until Nov. 2.

Pakistan LNG, on the other hand, concluded a tender for Dec. 7-8 delivery at $15.97/MMBtu to Vitol Bahrain. It also bought one cargo from SOCAR for December as part of a deal it signed in July. Under the deal, Pakistan was given the option to procure 12 cargoes over a period of one year.

The December transactions may have motivated Pakistan LNG to consider buying LNG for January as well, a market source with knowledge of the matter said.