First Half Of Current Fiscal Sees 7% Growth In Natural Gas Usage
India saw a notable rebound in natural gas consumption in the first half of the fiscal year, with a 7 per cent year-over-year growth. The reversal of the fall observed in the previous year was ascribed to the normalisation of global petrol prices and supply.
As per the oil ministry, between April to September, 32.6 billion cubic metres (BCM) of petrol was consumed. Consumption stayed relatively stable at 60 BCM for the entire fiscal year that ended on 31 March, similar to the levels recorded in 2018–19.
In 2019–20, petrol consumption increased by 5 per cent; however, the pandemic's effect on demand caused it to fall by a similar percentage in the ensuing year.
The year 2021–2022 also experienced a 5 per cent expansion, fueled by the post–pandemic recovery, yet faced a similar volume decline in the subsequent year due to the surging prices in international markets.
The Japan Korea Marker (JKM), serving as the benchmark for liquefied natural gas (LNG) spot market prices in North Asia, surged to nearly USD 70 per MMBtu ( Million British Thermal Units) in August 2022.
However, it has since plummeted to around USD 18. It's worth noting that the majority of India's long-term contracts for LNG imports are linked to crude oil, which has exhibited more stability compared to the previous year.
The current stability in global gas and crude markets has instilled confidence among Indian consumers, resulting in increased consumption. An industry executive mentioned that a further decline in prices could lead to even greater demand. Notably, LNG imports expanded by 9 per cent in the April-September period.
In the previous year, long-term LNG imports from a key supplier were disrupted due to the commencement of the Ukraine conflict. However, these supplies have since resumed, augmenting resources for domestic consumers.
Additionally, a 4 per cent upswing in domestic natural gas production, traditionally a more cost-effective alternative to imported fuel, has contributed to increased local consumption. India, which imports approximately 46 per cent of the gas it consumes, has witnessed a shift in policies that render domestically produced gas more affordable.
The surge in prices observed in the previous year prompted refiners, as well as various other industries, to transition to liquid fuel. Simultaneously, the escalating demand for electricity has resulted in an 18 per cent year-on-year increase in gas usage for power generation. The power sector currently represents 14 per cent of India's natural gas consumption.
