Singapore — Indian state-owned entities GSPC and GAIL issued Force Majeure notices to their suppliers of March-April delivery cargoes to Dahej, Mundra and Dabhol LNG terminals due to operational constraints after the country was put under a 21-day lockdown from Tuesday to contain the coronavirus outbreak, sources familiar with the matter told S&P Global Platts Thursday.
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"We have issued FM notices to let the suppliers know about the operational difficulties, delay in performance and also closure of some banking operations due to the lockdown imposed in the country. We are not canceling cargoes but deferring it," a source familiar with the matter said.
There was also market talk that Petronet LNG had issued FM notices to term suppliers from Qatar and Australia. Petronet LNG was heard to have also delayed a second-half May delivery cargo to Dahej terminal from Australia's Gorgon earlier this week.
Petronet LNG could not be reached for comment Thursday.
- India's natural gas demand set to plummet on lockdown, oil prices
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- India petrochemical markets hit record-lows
- Private India steel mills cut output by nearly 70%
The slew of FM notices from Indian LNG buyers reverberated across the market, with spot LNG prices in India dropping by nearly 50 cents/MMBtu over two days to an assessed $2.838/MMBtu on Wednesday, Platts data showed.
Market sentiment remained bearish with traders saying that the benchmark JKM price could go below $3/MMBtu amid lower demand seen from India.
"India was one of the bright spots for LNG demand in February. If Indian demand drops I am not sure what would be supporting LNG prices from a free-fall," a North Asia-based trader said.
India's demand for LNG is expected to be revised downwards with only essential industries such as fertilizers and oil and gas remaining operational, market sources said.
"Refineries would be running but with reduced runs as fuel consumption had experienced a 10% fall by mid-March, which will worsen to perhaps 30% in the next few days. There is no traffic on the roads. It's almost a curfew-like situation here," an India-based end-user said.
A nationwide lockdown was imposed in India on March 24 for three weeks till April 14.
"Demand for gas from the downstream industries like CGD, ceramics and power has already gone down and likely to be so at least till end-April," an Indian end-user said.