Gas Sector Check – Record Highs Of Spot LNG Prices Can Dampen Earnings: ICICI Securities


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Spot liquefied natural gas prices in Asia touched a record high of $70/metric million British thermal unit last week, a remarkable three times increase in three months, with a price of $23.5/mmbtu as of June 10, 2022.

This has been driven by reduction in Russian gas supplies to Europe via Nord Stream I pipeline and the sustained build-up of European inventories to meet their target of 80% of gas inventory build out before the onset of winter.

While the prospects for the rest of FY23 remain uncertain, we do see downside risks to our margin estimates for the year in the current environment.

Our sense is that domestic gas costs will average $10/mmbtu for H2 FY23E, with spot LNG prices to range between $40- 45/mmbtu.

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