Spike in domestic gas output may soon keep imports in check

A spike in domestic gas production will temper imports in the coming years even as the share of natural gas in India’s overall energy mix is expected to soar, a report by ratings firm CareEdge said.

Regulatory steps to adjust domestic gas pricing, stabilizing imported gas prices, and adequate liquefied natural gas (LNG) capacity will support the shift toward a greater share of natural gas while keeping import dependency at around 45% of total natural gas consumption by FY26, the report said.

India has set an ambitious goal of raising the share of natural gas in its overall primary energy mix to 15% by 2030 from 6% now.

“Expanding fertilizer, city gas distribution, power, refineries, and petrochemicals sectors are expected to see robust demand for natural gas,” Hardik Shah, director at CareEdge Ratings, said in the report, while forecasting that the current fiscal will see the highest ever gas consumption.

Imported LNG prices, which had shot up significantly in FY23 due to supply disruptions arising from the outbreak of the Russia-Ukraine war have normalized in the past one year.

With sizeable expansion of LNG export capacities being undertaken by the gas surplus hubs/regions of the globe, imported LNG prices in India are expected to remain range bound, thus supporting demand, the report said.

The higher demand for natural gas is also expected to be supported by sizeable domestic gas production as 30 million standard cu. m per day (MMSCMD) of new output has gradually come on-stream in the past three years, with another 15 MMSCMD expected to come on-stream next fiscal, CareEdge said.

India’s dependency on imported LNG, which stood at 53% of total consumption in FY21, has declined in the past three years and is expected to remain at 45% by fiscal 2026, it added.