India Pandemic Weighs on Natural Gas Demand Amid Souring GDP Outlook

A trader said while the power and fertilizers sectors were still operating, other labor-intensive sectors like glass and ceramic industries have been affected.

SEATTLE (Oil Monster):  India's deadly COVID-19 outbreak and widening localized lockdowns have soured the country's economic growth outlook, stifled its natural gas demand and resulted in more LNG carriers being diverted by gas companies, an analysis by S&P Global Platts showed.

On May 8, the southern Indian state of Tamil Nadu -- one of the country's most industrialized and among its largest by GDP -- imposed a two-week lockdown amid growing infections, joining several other states that have taken similar measures.

Tamil Nadu is home to Indial Oil Corp.'s Ennore LNG terminal with a capacity of around 5 million mt/year, and market participants expect the lockdown to hurt industrial and city gas demand similar to other gas consuming states like Gujarat and Maharashtra.

An Indian gas aggregator estimated that city gas demand had dropped by 40-50%, and demand from the industrial sector could drop by 20-25%.

'Some workers in industries have gotten infected, and many of them have gone back to their native towns. Our healthcare infrastructure isn't enough to treat everybody. Now, not only city gas demand is down [although it's still the most affected sector],' the same gas aggregator said.

A trader said while the power and fertilizers sectors were still operating, other labor-intensive sectors like glass and ceramic industries have been affected.

'The scope of lockdowns affects mobility, and is indicative of the strength of India's recovery. Much more extensive restrictions would prolong the pain of badly hit sectors, such as retail and tourism,' S&P Global Ratings said in its recent India report.

Courtesy: www.spglobal.com