We compensate for the lack of domestic gas supplies in the country by importing liquefied natural gas (LNG), demand for which has been quite robust. For perspective: LNG imports increased as much as 47% year-on-year during January, according to data from Petroleum Planning and Analysis Cell. That represents a 19% increase over December. The adjacent chart shows year-on-year performance for each month this fiscal year. On the other hand, domestic gas production for January 2018 declined 2% compared to December.

LNG demand is expected to remain strong in the near term. To be sure, Oil and Natural Gas Corp. Ltd (ONGC) estimates its gas production to increase over fiscal years 2017-2022 (FY17-FY22) to about 115 million standard cubic metres per day (mscmd) thanks to a slew of new projects.

“Together with Reliance’s new E&P (exploration and production) projects that may add ~30-35mmscmd, this promises to nearly double India’s gas production to ~175mmscmd," point out analysts from Jefferies India Pvt. Ltd in a report on 21 February.

However, Jefferies expects ONGC to miss its target, though the brokerage firm’s forecast suggests that the company’s output may increase 21% to 78 mscmd by FY21. With Reliance Industries Ltd’s KG-D6 and ONGC’s 98/2 blocks coming on stream thereafter, overall domestic gas production may exceed 150mscmd by FY23E (estimates), reckons Jefferies, adding, “Yet, the ramp-up may only accelerate from FY20E, in our estimate, with the near term outlook more mixed."

These factors should augur well for LNG import demand from a near-term perspective and are likely to keep the growth momentum continuing.