Petronet says term LNG tender in place, lockdown prompted force majeure on cargoes

Singapore — Petronet LNG said Aug. 11 that its term LNG deals are in place and there have been no cancellations, although it was compelled to invoke force majeure on nine term cargoes when the countrywide lockdown earlier this year sharply reduced demand.

While a statement by Petronet showed that it had invoked force majeure on the cargoes due to the pandemic-inflicted lockdown and the consequent drop in R-LNG demand, a separate statement from Petronet denied some media reports claiming that the company was planning to cancel a 10-year import tender which it had floated in February this year.

"During the said period, Petronet also received requests under regasification contracts for deferment of third party cargoes to subsequent months," it said in a statement, adding that demand for R-LNG had been recovering gradually after the lockdown was relaxed late-June.

Following the March 24 lockdown imposed in the country, Indian LNG April imports plunged 38% on the year to 1.27 million mt, with Indian aggregators such as Petronet LNG, GAIL and GSPC issuing force majeure, as reported by S&P Global Platts earlier.

On the back of the lockdown announcement and curtailment on LNG imports, the Platts West India Marker -- the price of spot LNG delivered to India -- had dropped to a record low of $1.763/MMBtu on April 28, down over 42% from March 24.

Before COVID-19, average send out during the January-February period was around 58 million cubic meters/day (92%) at Dahej Terminal and 3.57 million cu m/d (20%) at Kochi Terminal, it added. However, during the lockdown in April and May, the average send out from Dahej dropped to 37.26 million cu m/d (59.14%) and 49.72 million cu/d (78.92%), respectively, the statement showed.

In Kochi, April and May the average send out dropped to 2.29 million cu m/d (12.72%) and 2.20 million cu m/d (12.22%), respectively, it added.

Tender clarification

Petronet LNG also clarified in regard to its 10-year tender that there had been no official announcement of a cancellation.

"It may be informed that the sourcing of 10 years LNG import is being done through a RFI process involving various steps and no such announcements of cancellation of the process has been issued from our end," Petronet said in a recent statement. "Petronet LNG Limited hereby clarifies that the aforesaid media reports are untrue and contrary to the facts."

Platts had not reported about any plans to cancel the term tender. "You can't cancel term deals like that. Some of the reports that you have seen in other media is not true," a Petronet official told Platts.

Petronet said earlier this year that it is expected to finalize shortly a term deal via spot markers. "The selection process is on. It may take some time," the official said.

Petronet LNG is a joint venture between state-run ONGC, Indian Oil Corp. Ltd., Bharat Petroleum Corp. Ltd. and GAIL (India) Ltd. with each having an equity of 12.5%.

Petronet LNG's regasification volumes at the flagship Dahej terminal rose 7.9% to a record high of 24.7 Bcm in 2019-20, India's biggest LNG importer said in a statement June 30. Demand for power and fertilizer sectors, along with the terminal capacity expansion, helped regasification volumes to climb to a record high. Its Kochi terminal on the west coast processed 2.3 Bcm in 2019-20, up 79.2% on the year.