Domestic gas prices to decline in fiscal 2021 due to Covid-19 led global gas demand destruction
All major economies are facing huge gas demand destruction as well as risk of recession due to Covid-19 which has damaged the complete industrial outputs and supply chain. As many of the countries have imposed lockdown to contain the spread of Covid-19, it has impacted the airlines, transportation, industrial as well as tourism sector the most. This will have strong impact on the gas consumption in fiscal 2021. Also, with loss in demand on one hand, increased supply due to commissioning of new liquefaction terminals in last 2-3 years have added to the woes of the players. This is because it has led to extreme pressure on the gas and LNG prices across key hubs, questioning the business sustenance at these price levels.
In India, gas prices are determined as per an approved pricing formula that takes into consideration the prevailing natural gas prices in international hubs i.e Henry hub, Alberta, National Balancing Point (NBP) and the price of Russian gas.
