NEW DELHI: Driven by higher consumption in the city gas distribution (CGD) sector, natural gas consumption in India is projected to grow by nearly 60 per cent to 103 billion cubic meters (bcm) annually while gas imports will double by 2030, the International Energy Agency (IEA) said on Wednesday.
‘The India Gas Market Report: Outlook to 2030’ released by the IEA, says this will bring India roughly on par with the current gas consumption of Saudi Arabia.
Apart from CGD, India’s rising gas appetite is set to be pushed up by rapid expansion of compressed natural gas (CNG) infrastructure and the cost advantage of gas over liquid fuels for small industrial users.
“Heavy industrial and manufacturing sectors, such as iron and steel production, are also driving demand, collectively adding around 15 bcm/yr during this period,” it said.
Meanwhile, targeted strategies and policy interventions could boost gas consumption beyond the forecasted trajectory to around 120 bcm/yr by 2030, close to the current gas consumption of the entire continent of South America
India’s natural gas demand grew by more than 10 per cent in both 2023 and 2024. This growth is attributed to rapid infrastructure development, recovering domestic production, and an expected easing of global gas market conditions. This comes after nearly a decade of sluggish growth and periodic declines.
Since 2019, India has nearly quadrupled the number of compressed natural gas (CNG) stations and more than doubled residential gas connections, while the transmission pipeline network has expanded by 40 per cent. IEA expects the number of CNG stations and residential connections will nearly double again by 2030, with the gas transmission grid projected to expand by an additional 50 per cent.
Despite the steady demand growth, IEA predicts growth in imports will far outpace the rise in domestic production.
Liquefied Natural Gas (LNG) imports into India increased by 10 percent in 2023 and 2024. This came after a steep 6 per cent decline in 2022. Overall, LNG imports increased by 70 per cent in the 10-year till 2023, reaching 36 bcm in 2024. This matched the previous record set in 2020 and cemented the country’s position as the fourth-largest LNG importer globally.
Meanwhile, domestic production met 50 per cent of the country’s demand in 2023, and is projected to grow gradually to just under 38 bcm by 2030, or around 8 per cent above 2023 levels. Due to limited domestic production growth, India’s LNG imports will need to more than double to around 65 bcm annually by 2030 to meet rising demand, the report said.
“The prospect of higher gas demand in India coincides with an expected wave of new global LNG supply. However, it will require careful planning and market coordination to ensure supply security and to help gas to compete in a price-sensitive market, Keisuke Sadamori, IEA Director of Energy Markets and Security said.
The global body has also pointed out the gap between contracted LNG supply and projected LNG requirements is set to widen significantly after 2028, leaving India more exposed to the volatility of the spot LNG market unless additional LNG contracts are secured in the coming years.
Source: Business Standard
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