Page 34 - Policy Economic Report_Jan 25
P. 34
POLICY AND ECONOMIC REPORT
OIL & GAS MARKET
Natural Gas Market
Natural Gas Price – Monthly Review
? Natural gas spot prices at the US Henry Hub benchmark averaged $3.01 per million British thermal
units (MMBtu) in December 2024. Henry Hub's natural gas prices rebounded in December after
two consecutive months of declines. Prices experienced a sharp increase in the second half of the
month, rising by 43.6%, m-o-m, on the back of expectations of colder weather across the US.
Reports of a decline in underground storage levels in December underscored the increase in
demand. According to data from the US Energy Information Administration (EIA), weekly average
underground storage decreased in December by 9.5%, m-o-m. Henry Hub prices were up by
19.4%, y-o-y.
? Natural gas spot price at the Title Transfer Facility (TTF) in the Netherlands in Europe traded at an
average of $13.86 per MMBtu. The average Title Transfer Facility (TTF) receded in December after
trending upwards for two consecutive months, falling by 0.5%, m-o-m. TTF prices experienced
higher volatility in December amid renewed supply risk concerns. Prices fell earlier in the month,
pressured by a combination of lower-than-expected demand and higher LNG intake. However,
prices rose sharply in the second half of the month, partially offsetting losses in the first half,
ultimately resulting in a moderate decline, m-o-m. Nonetheless, according to data from Gas
Infrastructure Europe, EU storage levels were at about 72% of capacity as of 31 December, 13
percentage points below the previous month, but still expected to provide enough buffer during
the winter demand season. Prices were up by 20.4%, y-o-y.
? Japan Liquefied Natural Gas Import Price averaged at $12.76 per MMBtu for December 2024.
There is a change of -0.5% from last month and -11.6% from one year ago.
? The Union Cabinet has approved a new formula for pricing of natural gas and imposed cap or
ceiling price on the same. Natural gas produced from legacy or old fields, known as APM gas, will
now be indexed to crude oil prices. From April 1 2023, APM gas will be priced at 10% of the price
of basket of crude oil that India imports. The rate such arrived at however will be capped at US$
6.5 per MMBTU. The price such arrived at will also have a floor of US$4 per MMBTU.
? Further, in accordance with MoP&NG, Govt. of India, pricing freedom for gas being produced from
discoveries in Deepwater, Ultra Deepwater and High Pressure-High Temperature areas, the gas
price ceiling for the period 1st April, 2023 - 30th September, 2023 was notified as US$
12.12/MMBTU on Gross Calorific Value (GCV) basis as per notification dated 31st March, 2023.
Gas price ceiling was further revised for the period 1st October, 2023 – 31st March, 2024 was
notified as US$9.96/MMBTU on Gross Calorific Value (GCV) basis as per notification dated 30th
September 2023. Gas price ceiling was further revised for the period 1st April, 2024 – 30th
September, 2024 was notified as US$9.87/MMBTU on Gross Calorific Value (GCV) basis as per
notification dated 31st March 2024. For the period 1st October, 2024 – 31st March, 2025 Gas price
ceiling was further revised as US$10.16/MMBTU on Gross Calorific Value (GCV) basis as per
notification dated 30th September 2024.
January 2025 Page | 33
