,India

Analyzing India’s gas supply boom

LNG imports fill the gap as domestic gas production stalled.

India’s domestic gas production has been declining for years. India’s modest upstream productivity and challenging exploration and production regime prove to be a stubborn deterrent to new investments. Gavin Thompson of Wood Mackenzie shared that even if India’s gas demand has surged, the country’s notoriously byzantine business environment and more attractive opportunities elsewhere mean India’s upstream sector has remained firmly off the radar for many.  

Further, Thompson pointed out that those things prove to be good news for liquefied natural gas  (LNG). While domestic production has stalled, LNG imports have filled the gap. In 2020, LNG demand rose by around 14% to reach 25.7 megatonnes (Mt), with India climbing the ranks of the world’s most important LNG markets. Last year’s low traded LNG prices saw India import over 9 Mt of spot LNG as the country’s notoriously price-sensitive buyers came in from the cold.   

The rising availability of competitively priced domestic gas is giving fresh life into India’s gas market. Larger buyers and aggregators are building low-cost portfolios as traditional LNG buyers including GSPC, Reliance, Shell, and Indian Oil sign up for new domestic supply to take advantage of ceiling price-pegged domestic gas over rising spot LNG prices in the near term. 

Moreover, Thompson said that this is creating headwinds for Indian LNG demand. While fears of significant reductions in LNG demand have yet to materialise with demand through May/June close to record levels, looking forward the growth in domestic gas production is set to reduce LNG demand into the fertiliser sector. In addition, rising global spot prices are making LNG uncompetitive in the power sector, painting a more bearish picture for Indian LNG demand over the next few years. 

This is a concern for the LNG industry. An under-performing domestic gas production sector and strong growth in gas demand have long made India critical to future LNG demand projections. Indeed, India’s future appetite for LNG is one of the key drivers underpinning our bullish outlook for global LNG demand and future supply investment.  

But any concerns should be quickly assuaged. Whilst the current boom in domestic gas production will derail LNG demand growth in the short term, the lack of significant pre-FID domestic supply and no discoveries of note in blocks awarded under the Open Acreage Licensing Policy rounds should ensure that beyond 2024 India’s LNG demand roars back. We expect LNG demand to grow by around 5% annually between 2024-2030, reaching almost 37 Mtpa by this time – a reassuring outlook for the multiple project developers looking to India as a critical growth market, Thompson stated. 

 

Join Asian Power community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

Onshore wind will take up 82% of China’s 408 GW new capacity between 2021-2030.
With producing green hydrogen costs set to drop, APAC is ripe for a hydro revolution.
This is supported by Lao PDR, Thailand, and Malaysia.
The project consists of numerous ground-mounted solar installations currently in development.
ETS covered around 40% of China's 11,535 Mt CO2e emissions in 2019.
In a nutshell, the tips are to minimise total land use, optimise land assessment, and increase land of suitable land.
1.7% is the minimum amount of land needed for solar generation alone.
There is already a notice to proceed with the 50-MW Niigata East Port biomass project.
This plant will be powered using 3-GW solar and 500-MW wind energy.
This is despite the decline of new approvals for coal-fired powerplants in H1 2021.
The country’s share of solar and wind energy will remain consistent.
This will help the region deal with climate change challenges .
The developments of photovoltaic projects will consolidate the German firm's position in the country
They will be studying the feasibility of large-scale projects off the country's coast