India's demand for LNG is set to increase across industries, if prices are cooperative
Executives from India's leading importers have said that the demand for liquefied gas in India is expected to increase over the next few years. This will be driven by the demand for city gas, fertilizers, power, and refining.
They added that a lower price would be necessary to encourage further consumption.
India is the fourth largest 'buyer' of LNG in the world and wants to increase the gas share to 15% from its current 6.2% by 2030.
The market is seen as one of the key drivers for global demand but remains price-sensitive.
GAS DEMAND IS EXPECTED RISE
Petronet LNG, the world's largest gas importer, forecasts that imports will rise to 28 to 29 million metric tonnes in 2026 from around 25.5 million tons this year.
Akshay Singh, the Managing Director of India Energy Week, told reporters that "this year's gas demand will increase as last years' summers were relatively cooler."
He added that consumption will increase as more cities and homes are connected to gas pipeline networks. Also, refineries, fertiliser and power sectors, and other sectors, such as the fertiliser and power sector, will use more gas.
The Indian refiner Bharat Petrol Corp., which issued a 10-year LNG import tender recently, announced that it would be considering launching another long-term "import" tender next year, given its increasing gas sales in sectors such as transport, industry, and household.
Rahul Tandon is the head of its gas business. He said that BPCL sells 2.2 to 2.4 million tons each year and that this figure could triple by 2030, reaching 6.5 to 6.6 million tons.
Price Sensitivity
India's drive to increase its gas consumption depends however on the price. Asian spot LNG prices rose this month to $11.35 per million British Thermal Unit, the highest in nine weeks. Lower winter temperatures across northern hemisphere increased heating demand.
If prices fall, the head of GAIL (the state-run company) expects India to sign more long-term contracts for LNG imports.
Sandeep Kumar Gupta, Chairman and Managing director of Sandeep Kumar Gupta, said that he believes oil-linked gas contracts will be more affordable than at the current level.
Petronet LNG's Singh stated that $6-7 per mmBtu would be a price range which is comfortable for improving LNG consumption in India.
He said that "India needs to have more LNG contracts linked to oil, because Henry Hub is so volatile," referring the U.S. benchmark gas price for Louisiana.
U.S. Natural Gas Futures surged by 124% in a volatile trading session on Tuesday amid fears that the extreme cold forecast for the Northeast this week could freeze some gas wells until the weekend. (Reporting and editing by Emily Chow, Additional reporting by Nidhi Dhumal, Sethuraman N and Mohi Nrayan, Writing by Emily Chow, Editing by Jan Harvey.)
(source: Reuters)