India's Petronet LNG declares force majeure after QatarEnergy notice
India’s biggest LNG importer, Petronet LNG (NSE: PETRONET), has received a Force Majeure notice from QatarEnergy (QE), and as a result, Petronet LNG has issued corresponding Force Majeure notices to companies that it supplies LNG to, the company said in a stock exchange filing on March 5.
Petronet’s offtakers include GAIL (NSE: GAIL), Indian Oil Corporation Limited (NSE: IOC) and Bharat Petroleum Corporation Limited (NSE: BPCL). The company added that the likely impact of Force Majeure, which is currently an ongoing event, cannot be estimated at this point of time.
“The company is closely monitoring the developments and will keep the stock exchanges informed of any material updates in this regard,” Petronet stated. The company operates two LNG import terminals in India at Dahej and Kochi.
In light of the ongoing war in the Middle East region involving Iran and Israel, vessels are presently unable to safely transit through the Strait of Hormuz to reach Ras Laffan, the loading port of QatarEnergy.
A disruption at Qatar’s LNG plant, which supplies nearly 40–50% of India’s LNG imports, could result in a short-term supply shock for the domestic gas market, CNBCTV18 reported, citing JM Financial analyst Dayanand Mittal. Gas utilities such as Gujarat Gas and GAIL may come under pressure as a result of higher spot LNG prices and reduced transmission volumes.
Mittal said that the disruption may last about a month, potentially affecting earnings and gas supply across the sector.
GAIL in a separate filing said that due to supply restrictions imposed by Petronet, the allocation of LNG quantities to GAIL has been reduced to zero with effect from March 4. GAIL said it is currently assessing the situation with respect to any supply curtailment that may need to be imposed on its downstream customers. LNG supplies to GAIL from other suppliers are currently unaffected, it said.
Reuters has reported that GAIL and Indian Oil have already informed their customers about the reduction of gas supplies due to the Petronet Force Majeure. To offset the shortfall, companies including Indian Oil, GAIL and Petronet LNG are preparing to float spot tenders to secure additional cargoes, Reuters added.
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