Liquefied natural gas (LNG) imports surged 26% in January from a year earlier as a price drop in the international market boosted domestic demand.
India imported 2.4 billion cubic meters (BCM) of LNG in January, up from 1.9 BCM in the year-ago period, according to the oil ministry data. Import for the April-Jan period was up 15% from a year earlier.
Domestic gas consumption rose 14% year-on-year in January and 10% for the April-Jan period. LNG comprised 46% of the total gas consumed in the country in the April-June period. India imports gas only in the liquefied form as it doesn’t have any pipeline connectivity with gas exporters.
Expanding domestic supplies, mainly from the private sector, has also helped increase gas consumption. Natural gas production rose 6% in January from a year earlier. The increase was 5% for the April-January period.
“Falling international prices have been the biggest driver of domestic consumption,” said an executive at a gas marketing company, adding that the demand for spot cargoes has gone up. JKM, the North Asian spot LNG benchmark, has halved in a year to USD 9 per mmbtu from USD 19 a year earlier. This is an unusually low price for LNG in the winter season and is lower than the maximum of USD 9.96 that producers can charge for gas produced from difficult fields in India.
Lower-than-expected LNG demand from China, mild winter in the northern hemisphere, increased global gas supply, and higher gas storage in Europe have all weighed on prices, the executive said. This provides an opportunity for Indian price-sensitive consumers, he added.
The fertilizer sector is the largest consumer of natural gas in the country and depends on imports for three-fourths of its needs. City gas companies and power producers are second and third-largest consumers of natural gas respectively but depend far less on imports as they find it hard to sell pricey gas or the electricity produced from it to their customers.
Higher LNG demand is also pushing up capacity utilisation at import terminals. “People are rushing to book the slots,” Petronet LNG CEO Akshay Kumar Singh said a fortnight back on customer demand for regasification services at his Dahej import terminal in Gujarat. Dahej, India’s largest LNG import terminal, operated at 96.5% capacity in the October-December quarter, which is unprecedented in the winter season, Singh said, adding that he expected capacity utilisation to further increase in summer.
India aims to increase the share of natural gas in its primary energy mix to 15% by 2030 from the current 6%.
