Indian Oil Corporation (IOC), the country’s biggest oil refiner, has struck a five-year deal with Trafigura, a major global commodity trader, to import liquefied natural gas (LNG), according to three industry insiders. This agreement, with prices tied to the U.S. Henry Hub benchmark, is a big step toward ensuring India has enough energy to meet its growing needs.
Starting in 2025, Trafigura will ship three to four LNG cargoes to IOC, then bump that up to six cargoes a year from 2026 onward. The deal’s pricing set at 115% of Henry Hub plus a premium in the low $5s per million British thermal units, should help IOC keep costs in check. Neither IOC nor Trafigura had immediate comments on the partnership.
India ranks as the world’s fourth-biggest LNG buyer, hauling in 26.58 million metric tons last year, with the U.S. as its second-largest supplier. This deal is part of India’s plan to mix up its energy sources and ease its trade imbalance with the U.S. Some LNG originally bound for China might now head India’s way, a sign of shifting global trade winds.
The country’s gas use shot up 11% in 2024, driven by factories, refineries, and power plants. With homegrown gas production dropping, imports are a lifeline. The government is even mulling over cutting taxes on U.S. LNG to bring in more and trim the trade surplus with the U.S.
Other Indian companies are jumping on the bandwagon. GAIL India recently bid for a slice of a U.S. LNG project while locking in a 15-year supply deal, showing a trend toward long-term energy partnerships. Prime Minister Narendra Modi also promised to ramp up U.S. energy imports by 10 billion USD, putting deals like this in the spotlight. With India’s economy booming and hungry for energy, this Trafigura deal helps IOC stay ready for what’s ahead.
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