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SINGAPORE / NEW DELHI (Reuters) – India's demand for liquefied natural gas (LNG) is expected to increase by about 10 percent this year, as the country adds more and more import capacity infrastructure preventing gas from reaching consumers and growth rates.
In the 2015 Paris Agreement, New Delhi is committed to reducing by one third the carbon intensity of the Indian economy and aims to more than double the share of gas in its energy mix, which goes from 6.2% to 15% by 2030.
India had four terminals receiving LNG last year, absorbing between 21 and 23 million tonnes of cooled fuel, up nearly 10 to 13 percent from 2017, according to data from the Planning and Analysis Unit. oil and shipping data.
The government plans to build 11 more terminals over the next seven years. One of them was ordered this month and two more are expected to start later this year.
"City gas demand is expected to experience the highest growth rate, mainly due to an increase in commercial user consumption as a result of growth in city gas infrastructure," said Poorna Rajendran, Senior Analyst of the FGE Consulting Firm.
But with the current capacity of the terminals at 35 million tonnes per year and additions and extensions expected to bring this number to 41.5 million tonnes by the end of 2019, LNG import terminals in India will probably remain underutilized for years.
India's demand for LNG is expected to grow by 9 to 11 percent to 25 to 26 million tonnes this year, driven by demand from the urban gas distribution and transportation sectors, Wood Mackenzie badysts said. FGE. This would further limit the use of the terminal to just over 60% by the end of the year.
While the ruling party in India is planning to invest billions of dollars to expand the pipeline network across the country, progress is slow and half of the existing terminals are operating well below capacity, sources said. sector.
The government wants all LNG terminals to operate at full capacity by 2022, while completing the entire pipeline network, Indian Oil Secretary Kutty told Reuters.
Analysts believe, however, that India will struggle to do so.
"The pace at which (planned projects) will be implemented will be dictated by the financial and technical capabilities of developers, as well as by the broader infrastructure and land challenges in India," said Kaushik Chatterjee. , senior badyst, Wood Mackenzie.
STRESS
The Dabhol LNG terminal in the state of Maharashtra is underutilized, particularly during the monsoon season, although the operator Konkan LNG, a subsidiary of the GAIL utility company (India), plans to invest in a breakwater to protect the harbor from big waves.
Petronet LNG's Kochi terminal in southern India is not even connected to a main gas grid because of the resistance of landowners to pipelines, the sources said.
Kutty said that a 400 km pipeline linking Kochi to Mangalore Industries in the north "will be settled by March-April … in the worst case, it could be another month."
After that, the terminal capacity utilization will reach 40%, according to previous estimates.
The Indian Oil Corp.'s Ennore terminal, the country's newest, is also expected to remain underutilized, as significant progress in the pipeline is needed before the gas can be delivered to areas outside Ennore. or Mbadi, said Rajendran of FGE.
An IOC official said the Ennore terminal was only connected to three customers, including Chennai Petroleum Corp., a subsidiary of CIO, Madras Fertilizers Ltd and Tamil Nadu Petroproducts.
It will take at least two years to build a pipeline serving other Ennore customers, said the manager.
India operates 16,000 km of gas pipelines and an additional 13,000 km is approved and under construction, said Satpal Garg, a member of India's downstream regulator, the Petroleum and Gas Regulatory Council. natural gas (PNGRB).
In comparison, China's most comprehensive regional gas network in Sichuan and Chongqing provinces in the south-west of China has a total length of 42,000 km.
The PNGRB has granted licenses for the construction of city gas distribution networks across the country, targeting districts covering about 70% of the Indian population, said Woodmac's Chatterjee.
The government also aims to connect more than 10 million homes to 4.8 million connected gas by 2020, the city gas share of India's natural gas consumption to more than double to reach 15% of the global gas market, Chatterjee said.
"In the past, it had been difficult to obtain the approval of the state government, for example in Tamil Nadu and Kerala, but it is in the interest of both the center and the state government. have a pipeline because there will be an (industrial) development in the state, "Garg said.
"We are trying to convince states to speed up the clearance process and grant the right of way to the pipeline," he said.
India's national clean air program, launched at the beginning of the year in theory, should theoretically stimulate the use of natural gas in households, transport and electricity.
In fact, the plan is not legally binding and provides little guidance for reducing pollutants in the country, say badysts at FGE and Woodmac.
"India's (LNG) demand will grow and could match China, but the way to go there will be slow," said an LNG trader familiar with the market.
Report of Jessica Jaganathan in SINGAPORE and Nidhi Verma in NEW DELHI
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