Indian LNG importers are increasingly signing long-term purchase agreements tied to the U.S. Henry Hub price benchmark to mitigate market volatility. Since December, state-owned firms have secured at least four such deals totaling nearly 11 million tons annually. Traditionally, India’s LNG contracts were linked to crude oil, but the shift to Henry Hub pricing reflects a strategic move to hedge risk, even if the gas isn’t sourced directly from the U.S.India’s gas consumers, including power and petrochemical sectors, are highly price-sensitive and often reduce purchases when prices spike.
U.S. gas futures, linked to the Henry Hub benchmark, are seen as more stable and liquid compared to the volatile Asian Japan-Korea Marker (JKM). Bharat Petroleum’s finance director noted that JKM prices have seen extreme surges in winter, while Henry Hub remained relatively stable. In February, BPCL signed a five-year deal with ADNOC Trading for 2.5 million tons of LNG and may consider similar contracts based on its performance.
Indian Oil Corp. recently entered into a five-year agreement with Trafigura for the supply of 2.5 million tons of LNG—equivalent to 27 cargoes—set to begin mid-year. The contracts are priced at 115% of the Henry Hub benchmark, plus an additional $5 to $6 per million British thermal units, with delivery to India inclusive of shipping costs.
