We are delighted to present our new South Asia Monthly, formerly known as India Monthly, which will share our short-term forecasts for the region. Users licensed for the data service can access our India gas supply and power generation data.
LNG imports to India declined y/y in October, falling by 0.14 Mt (6%), the first decline since February. Prices for delivery into India close to 11 $/mmbtu, propped up by an October run-up in freight rates, and cooler weather all played a role in depressing imports. South Asian regional imports were dealt a further blow by an outage at Bangladesh’s lone regas terminal, the Excellence FSRU, for 12 days in November. The outage, along with difficulties bringing Excellence online this summer, has seen state-owned Petrobangla scrap future FSRU plans (except for the 3.8 Mtpa Summit FSRU, which is due online in Q1 19). New Indian regas infrastructure is undergoing commissioning in November. The 5.0 Mtpa Mundra is expected to take a cargo in 2018, but both it and the 5.0 Mtpa Ennore terminal are set for slow ramp-ups in 2019. We expect South Asian imports over the current winter (Q4 18-Q1 19) will grow by 2.9 Mt y/y. Looking ahead, we forecast that South Asia will import 7.6 Mt more y/y in 2019 and 5 Mt more y/y in 2020.
October saw the first y/y decline in India’s LNG imports since February, of 0.14 Mt (6%). A confluence of factors involving LNG prices, freight costs and weather led to the fall. Despite some moderation at the end of the month, average prices for deliveries to India of 10.87 $/mmbtu were still up by 2.26 $/mmbtu y/y. Freight rates played a role in high prices, with East of Suez spot hire rates moving from 110,000 $/d at the start of October to 175,000 $/d by month-end. Weather also likely contributed to the decline, with October CDDs decreasing by 4% y/y.
India was not the only country in South Asia to see recent import declines. Bangladesh’s lone FSRU, the 3.5 Mtpa Excellence FSRU suffered through a 12-day shutdown caused by a leak at an underwater hydraulic valve on 3 November. The facility, which began operations in August, has experienced several setbacks due to both mechanical issues and weather. The difficulties have seen state-owned energy firm Petrobangla scrap plans to pursue future FSRUs, instead now favouring land-based import terminals. The lone exception to this policy will be the 3.8 Mtpa FSRU from Summit LNG, which has already been chartered and is expected to start operations in Q1 19. Still, imports to Bangladesh are likely to be capped in the short-term by Excellence’s string of maintenance issues, and in the long-term by a lack of infrastructure development after Summit’s FSRU comes online.
New regas infrastructure is not likely to stimulate a large amount of new demand in India in the coming months. Despite receiving an official inauguration from the prime minister in October, Adani Group’s 5.0 Mtpa Mundra regas terminal has not yet received a commissioning cargo as work continues to bring the facility online. Adani does expect Mundra to take a cargo before the end of the year, while the company only expects the terminal to receive 1.5 Mtpa in 2019. IndianOil began commissioning work on its 5.0 Mtpa Ennore facility in November. The Ministry of Environment, Forest and Climate Change removed the last hurdle to the facility’s start-up by authorising IndianOil to lay pipelines through local wetlands. The lack of permitting had seen environmental groups threaten IndianOil with lawsuits in August that would have delayed construction of the pipes.
The next facility to enter service is likely to be H-Energy’s 4.0 Mtpa FSRU at Jaigarh. The unit that will eventually be docked at Jaigarh, the GDF Suez Cape Ann, is currently in Singapore for final modifications. H-Energy expects a start-up date of Q1 19, though only 2 Mtpa of capacity will be used until 635 km in pipelines can be built to facilitate gas uptake on India’s west coast.
Total power generation in India rose by 10.8 TWh y/y (11%) in October, the highest y/y monthly gain in any month since April 2016. The growth was dominated by thermal power, specifically coal. Coal-fired generation grew by 8.9 TWh y/y (11%), likely buoyed by the ongoing trade war between the US and China. China imposed a 25% retaliatory tariff on US coal imports in late August and global trade balances have shifted in India’s favour ever since. US coal shipments to China through the first 10 months of 2018 of 3.2 Mt were down by 1.9 Mt y/y, while India’s imports of US coal grew by 3.6 Mt y/y over the same time frame to 13.5 Mt. India is possibly receiving discounts on pricing for American coal, as US exporters deal with the loss of one of their biggest markets. The availability of US coal on the global market will likely support Indian coal-fired generation as long as the trade dispute remains unresolved.
Other generation sources are also boosting India’s total power generation. Gas-fired output grew by 0.5 TWh y/y (8%) in October despite a 20 mcm/d y/y (1%) drop in total domestic production. November is shaping up to reverse a six-month trend of y/y output declines though, as state-owned ONGC reported mid-month that its production had went above 70 mcm/d for the first time. The western offshore fields, Daman and Vasai East, led the gains.
Hydro-generation also grew y/y in October, by 1.5 TWh (14%), though the increase does not appear to be sustainable. India’s hydro stocks in the third week of November stood at 64% full, the exact same level as in the corresponding week in 2017. Stocks had been higher y/y ever since the monsoon season began in earnest in July, but have slowly eroded back to parity since the rains ended in early October. The recent slip in hydro reserves is likely to lend further support to thermal generation sources, providing more of an opportunity for coal-and potentially gas-fired output to increase moving into 2019.