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India’s hunger for natural gas being fed by costly imports amid dismal local production
India’s hunger for natural gas to feed key industries in the power and fertilizer sectors is continuing to grow unabated but that demand is increasingly being met by costly imports on the back of dismal domestic production.
The country consumed 174 million standard cubic metre per day (mmscmd) of natural gas in September 2019, a 6 per cent increase over the consumption of 164 mmscmd in the same month last year. The over demand growth stood at 3 per cent in the April-September 2019 period, according to latest data shared by research firm India Ratings.
However, the 6 percent growth in consumption in September fuelled a massive 18 percent jump in costly imports of Regasified-Liquefied Natural Gas (R-LNG).
“Domestic natural gas production decreased 4.3 percent year-on-year. During the month, gas volume production in Oil and Natural Gas Corp and private or joint venture fields recorded a fall of 4.6 percent and 6 percent, respectively, while Oil India Ltd recorded an increase of 1.5 percent year-on-year,” the agency said in a report.
Domestic natural gas contributed a mere 52 percent to the overall domestic consumption during September 2019. Additionally, the rising demand for gas is coming increasingly from the fertilizer sector rather than power plants. Consumption data for August 2019 captures that trend.
In August, the fertilizer sector consumed 26.2 mmscmd of imported natural gas but only 19 mmscmd of domestically produced gas. On the other hand, power plants consumed a mere 8.7 mmscmd of imported gas but 21 percent of the domestic output.
Apart from gas, the trend of rising imports feeding domestic demand is replicated in crude oil, too, with the only difference that both production and imports are going down. In September 2019, crude oil production decreased by 5.4 percent year-on-year.
Production volumes of ONGC and OIL declined 2.6 per cent and 5.4 per cent, respectively, and that of fields under production-sharing contracts decreased 11.4 per cent during the month. At the same time crude oil import volume decreased 6.6 per cent and the country’s oil import dependence ballooned to a staggering 83.1 per cent in September 2019.
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