The consumption of natural gas in India, the world’s third largest energy consumer, fell by 6 per cent y-o-y in the 2022 calendar year as high prices weakened demand for the key hydrocarbon, the International Energy Agency (IEA) said.
India consumed 60,523 million standard cubic meters (MSCM) of natural gas in the last calendar year against 64,658 MSCM in 2021, the data from Petroleum Planning and Analysis Cell (PPAC) show.
The decline in consumption, particularly across power, refining and petrochemicals, has largely been on account of high prices of natural gas in international markets as Europe secured supplies for the winters at record high prices (average in 2022 at $34 per mBtu) following the Russia-Ukraine war, which began in February last year.
“India’s gas consumption is estimated to have declined by 6 per cent in 2022 as high prices squeezed gas demand for power generation (down 24 per cent Y-o-Y), refining (down 30 per cent Y-o-Y) and petrochemicals sector (down 32 per cent y-o-y in particular,” IEA said in its gas market report for Q1 2023.
City gas demand was broadly flat, while consumption in the fertiliser segment and other end uses (which include agriculture, upstream operations and other industries) saw modest expansion throughout 2022, although they were not enough to compensate for the steep declines in the more price-sensitive sectors of the economy, it added.
In Asia, LNG spot prices averaged at $34 per million British thermal units (mBtu) in 2022, which is more than five times the five-year average between 2016 and 2020.
“In 2023, total gas consumption is expected to increase by 4 per cent, thanks to a modest recovery in power sector gas use and continuing – albeit slow – growth in the industrial and city gas sectors,” the global agency tracking the energy sector has projected.
Price-driven fuel-switching played the leading role in suppressing LNG demand, but a modest 3 per cent increase in domestic production also contributed to the decrease in LNG inflows, IEA said.
As per PPAC, India’s gas production, which accounts for half of the country’s demand, stood at 33,362 MSCM in 2022 compared to 32,362 MSCM in 2021.
India’s LNG imports dropped by 17 per cent in 2022, the steepest fall on record and the first decline covering two consecutive years in India’s two-decade history as an LNG importer, the IEA report revealed.
India imported 27,161 MSCM of liquefied natural gas (LNG) in 2022 against 32,655 MSCM in 2021.