India To See 6% Surge In Natural Gas Demand In 2024: IEA Report
India is expected to see a notable 6 per cent increase in natural gas demand in 2024, according to an International Energy Agency (IEA). The surge is primarily fueled by heightened consumption in crucial sectors, including fertilisers, power generation and various industrial applications.
After witnessing a 7 per cent year-on-year (YoY) decline in 2022, India's primary gas supply rebounded with a 5 per cent growth in 2023. The growth was predominantly steered by sectors such as petrochemicals, power generation, refineries, and industrial operations. Liquefied natural gas (LNG) imports marked a 7 per cent rise in 2023, totaling 29 billion cubic meters, contributing to 44 per cent of the nation's natural gas consumption.
Concurrently, domestic production increased by 6 per cent to reach 35 billion cubic meters, supported by heightened output from Reliance Industries' KG-D6 block.
India's LNG import trajectory is expected to continue its upward trend in 2024 with a projected 7 per cent increase. This growth is anticipated to be driven by escalating demand from the power and fertiliser sectors, aligning with India's strategic goal to cease urea imports by 2025.
The multifaceted use of natural gas in India encompasses fertiliser production, electricity generation, refinery processes, industrial functions, and as a vehicular fuel. The country's domestic production, however, falls short of meeting the burgeoning demand, necessitating significant imports of LNG transported via cryogenic ships.
Significant strides in gas market reforms were witnessed in 2023, with India implementing a Unified Tariff (UFT) policy in April. Covering a network of 21 pipelines, constituting approximately 90 per cent of operational or under-construction pipelines, the UFT policy aims to establish a stable, competitive, and transparent pricing regime. This initiative is anticipated to benefit both gas supply and demand, aligning with the vision of achieving a 'One Nation One Grid One Tariff' model.
India had approved the mandatory blending of compressed biogas into the domestic gas supply in November 2023. Starting at 1 per cent of total compressed natural gas and piped natural gas consumption from 2025, the blending mandate will gradually increase to 5 per cent by 2028-29.
