Bharat Petroleum Corporation Ltd. (BPCL) has issued a spot tender seeking a November-delivery LNG cargo at a JKM-linked price, marking an unusual approach for an Indian buyer.
BPCL is seeking 3.1-3.8 TBtu of LNG, with a 10% operational tolerance, for delivery to Dahej. The specified delivery windows are November 21, November 23-24, November 26, or November 29-30.
According to the tender document, sellers are required to submit offers linked to December JKM prices. The tender closes on September 24 at 2:30 pm IST, with bids remaining valid until 5:30 pm IST.
Indian buyers typically purchase spot LNG cargoes at fixed prices, and the use of the Japan Korea Marker (JKM) as a pricing benchmark for spot purchases remains relatively uncommon.
Buying spot cargoes at fixed prices can make downstream sales easier because buyers know their purchase costs in advance. However, fixed-price purchases can expose buyers to additional premiums associated with price movements.
JKM-linked pricing, by contrast, can help reduce the risk of purchasing spot cargoes at exceptionally high prices by linking the purchase price to movements in the regional LNG benchmark. Buyers using JKM-linked pricing may also use hedging strategies to manage price volatility.
“It’s good to know that Indian consumers are developing hedging capabilities,” an Indian LNG buyer said.
Strong Indian LNG Demand
LNG demand from India remains strong despite elevated prices following disruptions to shipping through the Strait of Hormuz.
India has purchased at least seven LNG cargoes during September, according to LNG traders. Around 60% of India’s LNG supplies were sourced from the Middle East before the US-Iran conflict, increasing the need to secure alternative sources of supply.
Indian companies have also been purchasing approximately 9.5-10.5 TBtu through fertiliser tenders every two weeks, according to LNG market participants. These tenders are typically issued within 10 days of the scheduled start of regasified LNG supply, creating significant near-term demand for cargoes.
BPCL’s Longer-Term LNG Strategy
The November tender represents BPCL’s first use of JKM as the pricing basis for a spot LNG purchase.
The company has previously sought longer-term LNG supplies using JKM and Dated Brent as pricing benchmarks. Under an earlier tender, BPCL sought four to eight cargoes annually for a 10-year period beginning in 2026.
The procurement structure called for four cargoes per year during 2026-2029, followed by eight cargoes annually from 2030 through 2035.
The use of JKM-linked pricing for the November spot tender indicates a shift from BPCL’s more conventional fixed-price approach and highlights the growing role of pricing flexibility and risk management in India’s LNG procurement strategy.
