With the increase in domestic natural gas production, India’s dependency on imported liquefied natural gas (LNG) is expected to fall to about 45% of total consumption in 2025-26 after gradually declining from 53% in 2020-21, CareEdge Ratings said in a report on Tuesday.
The higher demand is expected to be supported by sizeable growth in domestic gas production wherein nearly 30 million metric standard cubic meters per day (MMSCMD) of new domestic natural gas production has gradually come on stream over the past three years and about 15 MMSCMD is expected to come on-stream during 2024-25.
“With greater thrust of the government for transitioning towards cleaner fuel, there was a steady growth in natural gas consumption till FY20. However, due to the impact of the Covid-19 pandemic and sharp increase in imported LNG prices due to the geopolitical situation, there had been a decline in natural gas consumption during FY21 and FY23,” said Hardik Shah, director, CareEdge Ratings.
The rating agency expects India to record its highest gas consumption in a year so far in 2023-24. The note further said that natural gas consumption declined in 2022-23 with gas losing its cost competitiveness to alternative fuels, owing to the sudden outbreak of war between Russia and Ukraine in February 2022 leading to a sharp increase in natural gas prices.
India aims to increase the share of natural gas in its primary energy mix to 15% by 2030 from 6% at present, focusing on key end-use sectors such as fertilisers, city gas distribution, power, refineries and petrochemicals.
