Home / Industry / Energy /  Govt taps state-run firms amid LNG crisis
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NEW DELHI : With liquified natural gas (LNG) prices remaining high and no long-term global supply contracts likely to be available in the next three years, India is exploring a plan that involves participatory commitments by its state-run energy firms in global LNG contracts available after five years, in lieu of securing immediate supplies, said a top government official.

The plan being explored in top levels of the government comes against the backdrop of LNG supplies to India getting affected by the Ukraine war. Russian supply cuts have prompted European nations to corner a bulk of international contracts to stock up for winter. Henry Hub Natural Gas Spot Price is at $8.63 per million British thermal units (mmBtu).

Experts see value in the India plan.

“In its rush to get rid of dependence on Russian gas supplies, Europe is crowding out Asian buyers, including India, in the LNG market. Prolonged period of depressed prices had postponed FIDs (final investment decisions), leading to lack of long-term supply options in immediate future," said Debasish Mishra, partner at Deloitte.

“Indian oil PSUs which have a stake in the Mozambique project should be hopeful as Total has revived the project after violent threats, expecting the first supplies to start by 2024. They may be able to time-swap those contracts," Mishra added.

This supply concerns also comes amid India’s energy transition plans with a growing focus for making all clean energy sources including green hydrogen consumption mandatory. Green hydrogen has become an energy security imperative for India as the country imports 85% of its oil and 54% of gas requirements.

While an Oil India Ltd spokesperson declined comment, queries emailed to the spokespersons of India’s ministry of petroleum and natural gas, GAIL (India) Ltd, Petronet LNG Ltd (PLL), Indian Oil Corp. Ltd (IOC), Bharat Petroleum Corp. Ltd (BPCL), Hindustan Petroleum Corp. Ltd (HPCL), and ONGC Videsh Ltd (OVL) on Friday afternoon remained unanswered till press time.

India’s natural gas consumption has been on an upswing with a focus on developing a gas-based economy, with the country consuming 163.06 million metric standard cu. m per day (mmscmd) in FY22. Gas comprises about 6.2% of India’s primary energy mix, far behind the global average of 24%. The government plans to increase this share to 15% by 2030.

With India being the world’s fourth-largest LNG importer, Indian firms have inked long-term LNG contracts totalling 22 million tonnes per annum (mtpa). India’s gas demand is expected to be driven by the fertilizer, power, city gas distribution, and steel sectors. India’s import and production of natural gas in 2021-22 resulted in supplies of 64.8 billion cu. m (bcm) in the country.

India produced 34,024 mmscm of gas in 2021-22 and is also expanding its national gas grid to 35,000km from the current 20,000km pipeline length.

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