By Shariq Khan
NEW DELHI (Reuters) -India’s natural gas consumption is set to jump 60% between 2023 and 2030, doubling the country’s need for liquefied natural gas imports, as domestic output is expected to grow much more slowly than demand, the International Energy Agency said on Tuesday.
Rapid urbanisation and industrialisation are set to transform the energy market in the world’s fifth-largest economy and drive gas demand growth through the end of the decade and possibly beyond that, the IEA said in a report.
After a decade of slow growth and periodic declines, India’s natural gas demand rose more than 10% in the past two years, the Paris-based agency said.
By 2030, India’s gas demand will rise to 103 billion cubic meters (bcm) per year by 2030 in the IEA’s most-likely scenario. If the government provides additional policy support for the sector, annual demand could reach 120 bcm by 2030, the IEA said.
Over the same period from 2023 to 2030, India’s domestic production is expected to grow by 8% to about 38 bcm per year, the IEA said.
That means India, currently the world’s fourth-largest buyer of LNG, will have to double annual imports to about 65 bcm by the end of the decade, the report said. That would equate to nearly 48 million metric tons a year of LNG, in line with India’s current import terminal capacity.
The forecast is more bullish than that from Italian producer Eni, which expects India’s LNG demand to double in the next 15 years.
India, which is expected to be the biggest driver of global energy demand growth this year, will have to strategically plan its LNG procurement and expand import infrastructure to avoid exposure to spot-market volatility, the IEA said.
“As legacy contracts expire, India faces a widening gap between contracted supply and projected demand after 2028, potentially increasing exposure to spot market volatility unless new long-term contracts are secured in the coming years,” the agency said.
Two Indian state refiners inked LNG purchase agreements with Abu Dhabi National Oil Co (ADNOC) this week while Indian oil firms are also in talks to buy U.S. LNG, eyeing higher output from the world’s top exporter from President Donald Trump’s policies.
India has seven LNG import terminals with a capacity of around 47.7 million metric tons a year. A rapid rise in LNG requirements will necessitate additional import capacity in the second half of the decade, the IEA said.
Major discoveries and new pipeline infrastructure have helped India increase the share of natural gas in its energy mix, Prime Minister Narendra Modi said in a virtual address to the India Energy Week conference in New Delhi on Monday.
Modi has set a target to boost the share of gas to 15% of the country’s energy mix by 2030, from the current 6.2%.
With growing demand, India has the potential to be a price maker instead of a price taker, Cristian Signoretto, Eni’s global gas & LNG director said, pitting India against Europe’s benchmark Title Transfer Facility (TTF) or Asia’s Japan/Korea Marker.
(Reporting by Shariq Khan in New Delhi; Editing by Sonali Paul and Eileen Soreng)
