Page 35 - Policy Economic Report - June 2024

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 $2.12 per million British thermal
units (MMBtu) in May 2024. Henry Hub's natural gas prices advanced for a second consecutive
month in May, increasing by ~33%, m-o-m. Prices rallied on the back of higher domestic cooling
demand amid warmer-than-expected weather and an increase in US LNG demand, particularly
from the Asian region. However, prices remained at historical lows (at an average of $2.1/mmbtu
in May), capped by strong domestic production.

• The natural gas spot price at the Title Transfer Facility (TTF) in the Netherlands in Europe traded
at an average of $10.12 per MMBtu. Natural gas prices in Europe rose for a third consecutive
month. The average Title Transfer Facility (TTF) price went from $9.1/mmbtu in April to
$10.1/mmbtu in May, an 11.4%, m-o-m, increase. According to data from Gas Infrastructure
Europe, EU storage levels were at 70% capacity as of 31 May of this year. Despite these healthy
storage levels, prices remained sensitive to geopolitical developments. Moreover, expected plant
maintenance outages at some Norwegian gas facilities this summer season renewed concerns
over supply risk, thus adding upward pressure on prices. Prices were essentially flat y-o-y.

• Japan Liquefied Natural Gas Import Price averaged at $11.26 per MMBtu for May 2024. There is
a change of -5.2% from last month and -16.2% 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 – 31st
September, 2024 was notified as US$ 9.87/MMBTU on Gross Calorific Value (GCV) basis as per
notification dated 31st March 2024.

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