India’s gas demand is forecast to reach 105 billion cubic metres by 2030 with imported liquefied natural gas expected to account for more than half of supply, given the limited upside in domestic production, according to Norwegian consultancy Rystad Energy.
LNG demand is expected to increase by 70% through 2030 versus last year, which saw monthly imports of between 1.4 million and 2.4 million tonnes and totalling approximately 25 tonnes.
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New receiving and regasification projects are planned, while Petronet LNG recently announced the further expansion of its existing Dahej import terminal from 17.5 million tonnes per annum to 22.5 million tpa in five to six years.
However, pipeline infrastructure will be key to unlocking India’s latent LNG demand and the rate of increase in LNG imports will depend in no small part to the completion of gas distribution lines under construction of planned.
India today has approximately 17,000 kilometres of operational gas trunklines and the government is trying to double that over the next decade, with a focus on new connections in the south and east of the nation.
Around 12,000 kilometres of pipelines are under construction or at various stages of development.
“Despite the increases in regasification capacity, India has a poor track record of pipeline completion and this is expected to continue to challenge the country’s ability to deliver gas to demand centres further inland,” said Kaushai Ramesh, Rystad gas and power markets research analyst.
This lack of pipeline infrastructure meant the existing Kochi and Ennore LNG import facilities — both of 5 million tpa capacity — last year only achieved respective utilisation rates of 12% and 8%, according to Rystad.
“The Kochi-Mangalore pipeline... was plagued by delays due to misconceptions around transmission safety and land disputes since 2013 and was finally brought on line in [January] 2021,” he said.
“This will boost the Kochi terminal utilisation from 12% to close to 25% and eventually to 50% once the Bangalore section is completed.”
Meanwhile, the Ennore terminal on India’s southeast coast is too expected to remain underutilised until it is connected to the national gas grid beyond Chennai around 2024.
LNG contracting models
India today imports much of its LNG on term contracts but from the middle of the decade Rystad expects there to be “substantial” uncontracted LNG demand with more than 50% being uncontracted after the RasGas sales and purchase agreement expires in 2028.
“As a result, we expect Indian buyers will need to sign new long-term contracts or expose themselves to the volatility of the spot market. With the expectation of a tighter market around the end of the decade, new long-term agreements could be a safer bet to ensure enough supplies,” added Ramesh.
Since 2015 India has tried to reduce its energy dependency on Qatar and this LNG exporter’s share of India’s imports has declined from 47% six years ago to 34% in 2020 although Qatar will remain the main supplier in the medium term.
Some 108 million tonnes of new LNG supply is needed by 2030 to meet strong global demand with the increase being driven by Asia, noted Rystad.
While the established North Asian importers of Japan, South Korea, Taiwan and China will continue to dominate worldwide LNG demand, South and Southeast Asian nations combined will overtake European imports by at least the middle of this decade, according to the consultant.