Page 34 - Policy Economic Report - September 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 $1.98 per million British thermal
units (MMBtu) in August 2024. Henry Hub's natural gas prices fell again in the month of August,
falling by 4.3%, m-o-m. Reports of elevated storage levels remained a drag on prices. According
to data from the US Energy Information Administration, as of 23 August, underground storage
was 2.6% higher, m-o-m, 7.3% higher y-o-y, and 12.1% above the five-year average. Nonetheless,
ongoing production cutbacks coupled with higher LNG exports partially offset losses, as terminals
returned to normalcy amid limited disruptions from the hurricane season. Prices were down by
23.3%, y-o-y.

• The natural gas spot price at the Title Transfer Facility (TTF) in the Netherlands in Europe traded
at an average of $12.37 per MMBtu. Natural gas prices in the EU rebounded in August. The
average Title Transfer Facility (TTF) price went from $10.4/mmbtu in July to $12.4/mmbtu in
August, a 19.6%, m-o-m, increase. Prices rose on the back of geopolitical developments, despite
data from Gas Infrastructure Europe showing that EU storage levels were above 90% capacity as
of 31 August. Supply risk concerns were further exacerbated by higher US LNG demand from the
Asian region, which diverted cargoes away from Europe amid high price premiums. Prices were
up by 10.6%, y-o-y.

• Japan Liquefied Natural Gas Import Price averaged at $12.47 per MMBtu for August 2024. There
is a change of -0.2% from last month and -0.6% 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.

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