Executives in the industry have cautioned that the supply of fuel to India is already beginning to suffer from the growing worldwide shortage of liquefied natural gas (LNG) tankers.
The fourth-largest LNG importer in the world is India. International purchases have increased as European countries scramble to find tankers to carry LNG before winter sets in because of the ongoing diplomatic dispute with Russia. In the meantime, India’s imports of LNG have decreased due to a scarcity of transport boats.
“Ever since the Russia-Ukraine conflict began, the gas supply that was happening from Russia to Europe has moderated, which Europe is trying to offset by procuring LNG. This has caused a sudden spike in demand for liquid cargo vessels from Europe,” a Mumbai-based sector expert said.
The analyst went on to say that it is possible that several Russian ships that transported LNG would have been blacklisted as a result of international sanctions against the nation. There may have been even fewer of these vessels available as a result.
The amount of LNG tankers that are still readily accessible for spot agreements is quite low. Globally, the majority of the LNG fleet is constantly ensconced in long-term charters. The result is that the spot market is already incredibly small and is currently getting smaller.
There is only one gas transit vessel in the fleet of the Shipping Corporation of India (SCI). Foreign shippers run the majority of LNG tankers, while Indian traders primarily use spot markets to access their services.
Oslo-based investment banking firm Clarksons Securities, which specialises in shipping energy and offshore energy, said earlier this week that rates for LNG carriers have risen to an average of over $300,000 for a single voyage.
While the International Energy Agency (IEA) has said that Europe’s gas storage for this winter was nearly full, the following season poses a significant challenge as contract prices rise and supply chain issues are expected to continue into the next year.
“The LNG market has Shortage of LNG tankers begin more volatile than even the crude oil market. Russia is a large exporter of NatGas. Russia has curtailed NatGas supply to Europe. So, gas prices have doubled in recent months. The war situation is seen creating risks for vessels and discouraging them from going closer to the scene of military action,” said Jayyannt Lapsiaa, President of the All India Liquid Bulk Importers and Exporters Association.
“Availability of LNG vessels has tightened and freight rates are up,” he added.