With output from Reliance Industries Ltd-operated KG-D6 gas fields plunging, the country's dependence on imported gas has increased. This is compelling companies to look for long- and short-term contracts with global suppliers.

An indication of increased dependence on imported gas is a substantial rise in liquefied natural gas (LNG) sourcing by companies such as GAIL (India), Reliance Industries and GSPC.

Higher price

This also meant that days of cheap natural gas were over.

The imported gas is available at $8.5/mBtu and $14/mBtu (excluding other levies and taxes); D6 gas is available at $4.2/mBtu (excluding the levies and taxes) in the domestic market.

To meet the demand, GAIL could end up importing on average 12-16 cargoes of spot/mid-term LNG in 2011-12, up from about three cargoes a year earlier. Each LNG cargo is about 80 million standard cubic metre (mmscm).

Reliance Industries is expected to import 24 cargoes during the current fiscal, industry sources said.

Apart from its long-term contract, Petronet LNG is expected to get about 28-29 cargoes and GSPC about 13.

“With domestic demand far exceeding the indigenous supply and very few new local sources available, additional demand will have to be catered through imported gas,” a senior industry official said.

Output and consumption

Towards the end of last fiscal, the output from the country's largest gas fields (KG-D6 gas fields), has been seeing a continued drop after hitting the peak of 60 mmscmd in end-2009.

Currently, output from the fields was between 39-40 mmscmd.

Those tracking the sector said that around 220 million tonnes a year of LNG is currently produced in about 19 countries.

Qatar is the largest exporter with capacity of around 77 million tonnes a year. The others include Malaysia, Indonesia, and Australia.

Out of the total LNG produced globally, around 60 per cent is consumed in the Asia Pacific by five major importing countries – Japan, South Korea, Taiwan, China, and India.

The balance 40 per cent is consumed by other 18 countries such as Spain, the US, France, UK, Belgium, and Italy.

> richam@thehindu.co.in