(Bloomberg) -- India is considering building a strategic reserve of liquefied natural gas to guard against future price spikes or supply shortages after last year’s energy crisis, according to a senior executive at the nation’s top importer.

The government has “proposed we should have more storage space for LNG so that when prices are lower we should store, and supply when there is crisis,” Vinod Kumar Mishra, finance director at Petronet LNG Ltd., said in an interview. “We have seen the crisis and it was difficult for the government also to ensure supply.”

India curbed LNG imports last year after Russia’s invasion of Ukraine upended the market and sent prices surging. While Prime Minister Narendra Modi’s administration aims to more than double the share of gas in the country’s energy mix, high prices have proved a deterrent for some industries.

More governments are looking to set up emergency stockpiles of LNG, similar to the oil industry’s strategic reserves, as the super-chilled fuel becomes a more important element of the global energy mix. Japan — one of the world’s top buyers — said last year that it is considering a similar plan.

While no storage targets have yet been discussed, Petronet is adding more tanks at its LNG import terminals to store the imported fuel and is working on a floating import plant in the eastern state of Odisha, Mishra said.   

Long-Term Deals

Last year’s crunch is also prompting Indian buyers to hunt for long-term supply deals, which ensures deliveries to customers at more stable prices, Mishra said. Some of these deals are likely to be sealed in 2023, he said. 

Petronet is in talks with Qatar to renegotiate its 7.5 million tons-a-year contract that expires in 2028. The New Delhi-based company is looking to expand the contract by as much as 1 million tons, according to Mishra.

Still, a recent drop in spot prices — down roughly 80% from August — is reviving demand in purchases for prompt delivery, said Mishra. Prices will need to fall to about $6 to $7 per million British thermal units to accelerate purchases, he added. The Asian spot benchmark closed above $12 on Friday, according to traders.

“India’s market is price-sensitive,” said Mishra. “It is not dependent on one kind of fuel. It can switch to any fuel that is cheaper.”

©2023 Bloomberg L.P.