Gas imports unlikely to fall for now

Twesh Mishra New Delhi | Updated on January 12, 2018 Published on June 27, 2017


Demand to far exceed production in the near term, says expert

The objective of the recent Reliance-BP Plc investment plan may be to boost domestic gas production, but this may take some time.

K Ravichandran, Senior Vice-President at ICRA, told BusinessLine that the demand for natural gas will double in the near term, but domestic production will lag far behind.

India’s domestic production has been falling for some time despite a number of new fields being developed and RIL-BP announcing further investments in their KG-D6 block.

“Even in the best-case scenario for domestic gas availability over the next decade, according to our estimates it is only about 44-45 mmscmd from ongoing fields. That would mean that the demand for gas will not be completely met by domestic gas and dependence on imported LNG will continue,” he said.

A joint statement from RIL-BP said that investment in the KG Basin is expected to bring 30-35 mmscmd of domestic gas production on-stream over 2020-22. BP Chief Executive Bob Dudley had said that the gas project would reduce India’s import dependence by 10 per cent.

According to data from the Petroleum Planning and Analysis Cell, gas consumption in the country stood at 136.12 mmscmd for financial year 2016-17. Of this, imported LNG stood at 67.65 mmscmd during the period. The total demand in the next four years is expected to grow to around 240 mmscmd and out of that, 50 per cent or around 120 mmscmd will be imported, according to analysts.

At $6 per mmbtu, the country’s import bill comes to around $4.5 billion a year. If gas import doubles as envisaged, and prices remain in the same range, the bill will be close to $10 billion a year.

“In rupee terms, currently it is around ₹30,000 crore, and if the import doubles, it will be close to ₹60,000 crore,” the analyst explained.

Sectors such as fertilisers, city gas distribution, refineries and other industrial sectors are expected to drive the demand for gas in the country. The current gas consumption in the country is 145-150 mmscmd. The break-up between LNG and imported gas in the total consumption is roughly 50:50.

Published on June 27, 2017
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