LNG imports increase 7% as demand grows

New Delhi: The import of liquefied natural gas (LNG) increased 6.8% year-on-year in the nine months to December 2019 as local output declined and demand expanded. LNG import expanded to 23.58 billion cubic meters in April-December 2019 when gross production shrank 3.2% and total consumption climbed 3.9%. The share of LNG in total domestic consumption expanded to 51.6% during this period from 47.9% in the year-ago period.

In December, the rise in LNG import was much sharper at 22.8% as local production fell 7.9% and consumption expanded 5.9%. Acollapse in the global LNG market, resulting in spot prices for Indian buyers falling below $4 per million metric British thermal unit (mmBtu), has also led to an increase in gas imports.

Many buyers, locked in long-term contracts where prices are linked to crude oil, are unable to benefit though. India has been seeking to renegotiate long-term LNG purchase contract with its biggest gas supplier, Qatar, to bring down prices so that the fuel becomes more affordable for Indian consumers. Qatar has rejected the demand but Indian officials feel the doors are not yet fully shut.

Industry executives say a big jump in LNG demand can come once stranded gas-based power plants start operating. The government has been planning to pool tariff from gas-based plants and renewable facilities to make the blended tariff affordable, and revive gas-based generators. Falling local gas production is increasing India’s dependence on imports.

A jump in local output is expected from the middle of this year when gas fields, operated by Reliance Industries and BP, will begin production. During April-December, ONGC’s gas output fell 2.7% from a year earlier but Oil India’s rose 0.8%. Private players’ production fell 7.6%.

In December, ONGC’s output declined 9% due to lower gas production from Vasistha/S1wells due to sand incursion, protests in Assam and lower offtake by some consumers. Oil India’s output declined 2.87% mainly due to lower offtake by consumers. Private players’ production shrank 4.7% due to lower off take by some consumers and weaker performance in some fields.