Petronet LNG Ltd emphasized India’s need for more oil-linked LNG contracts, citing extreme volatility in Henry Hub–based pricing. The company believes oil-linked agreements offer greater stability and predictability, crucial for India’s energy security as demand for natural gas continues to rise in the domestic market.
India’s largest liquefied natural gas (LNG) importer, Petronet LNG Ltd, has urged the country to pursue more oil-linked LNG contracts, highlighting the risks of relying heavily on the Henry Hub benchmark, which has shown sharp price swings in recent months.
Key highlights:
Petronet LNG noted that Henry Hub–linked contracts expose buyers to unpredictable U.S. gas market volatility, making long-term planning difficult.
By contrast, oil-linked contracts provide greater stability, as Brent crude prices have been relatively more predictable compared to Henry Hub’s fluctuations.
India’s growing reliance on LNG imports—driven by rising demand in power generation, fertilizer, and industrial sectors—makes pricing stability critical for energy security.
Analysts point out that oil-linked contracts could help shield Indian consumers from sudden spikes in gas prices, ensuring smoother supply chain management.
The call comes as India continues to diversify its LNG sourcing strategy, balancing U.S. Henry Hub deals with Middle Eastern and other oil-indexed agreements.
Petronet’s stance underscores the importance of contract diversification in India’s energy mix. With LNG demand projected to rise steadily, oil-linked contracts may become a cornerstone of India’s long-term energy planning.
Sources: Reuters, CNBC-TV18, Energy Intelligence, Economic Times