In an interview to CNBC-TV18, Arvind Sanger, managing partner of Geosphere Capital Management, and Ken Peng, Asia Pacific Investment Strategist at Citi Private Bank, spoke at length about the global energy shortage.
First up, Sanger said that the coal supplies at power plants in India are at critically low levels.
“We had a conversation, a couple of weeks ago, and I mentioned at that time that I was concerned about what was going on in energy prices, natural gas prices. You focused on China; you have forgotten what is going on in Europe, you have not discussed what is going on in India. In India, coal supplies at power plants are at critically low levels, less than six days supply,” he said.
“Indian utilities and others are having to import. They have turned off coal supplies to some of the aluminium and other producers and you are going to see some rationing there because there is a critical shortage of coal supplies and India's LNG import prices are shooting up because LNG import prices into Asia and Europe are approaching USD 30 per mmbtu, which is the equivalent of USD 180 per barrel. So, this is a global energy shortage issue, which India is absolutely not escaping unscathed, unfortunately,” said Sanger.
Meanwhile, Peng said that there were efforts to try to swap coal for natural gas, but now there is neither coal nor natural gas.
“There is just not enough supply for imports in the natural gas space and China has deliberately reduced its coal imports by some three quarters over the past year. So, the solution to this is fairly simple, we need to go back to dirtier energy, one cannot turn from coal to natural gas overnight and that's how this problem is going to be resolved by importing more coal,” he said.
For the entire discussion, watch the video