India to drive global gas demand: IEA

After a temporary slowdown in 2020, India is set to emerge as one of the primary drivers of growth in gas demand in Asia, according to a report by the International Energy Agency (IEA) on the gas sector for 2020.

According to the IEA, India is set to see an estimated 28 billion cubic meter (bcm) per year increase in total consumption during 2019-25, owing to a combination of supportive government policies and improved liquefied natural gas (LNG) and pipeline infrastructure.

The report indicates that India’s natural gas production is expected to increase 12 bcm a year in 2019-25, with most of the net increase coming from a handful of ongoing deep water development projects.

The report highlighted that the Asia Pacific region might increase its share of LNG imports, from 69 per cent in 2019 to 77 per cent by 2025. Out of this, India will account for about 20 per cent of incremental trade, and its imports too could increase by 50 per cent between 2019 and 2025.

Natural gas consumption in India rose by an estimated 10 per cent year-on-year (YOY) during the first quarter of 2020. However, the imposition of the lockdown in March led to a sharp decrease in demand. Based on the report, gas consumption was down by 25 per cent in April, with small industry and CNG distribution for transport taking the biggest hit, while gas-fired generation was up 14 per cent despite a 24 per cent fall in electricity demand, as cheap imported natural gas was used to meet peak demand.

IEA said the primary driver of India’s post-crisis demand expansion will be the industrial sector, representing 36 per cent of incremental growth between 2019 and 2025. The energy industry — led by refining — contributes another 10 per cent

to total consumption increase. The growing networks should drive robust demand growth in the residential and transport sectors, which account for 19 per cent and 34 per cent of incremental demand, respectively.

“This rapid growth in industry and energy own use is fuelled by improved access to natural gas, both in traditional gas-consuming sectors, such as fertilisers, and in a range of light

industries where gas is already cost-competitive with liquid fuels. Expansion of India’s pipeline network will enable greater gas use over time,” the report said. In addition to this, the expansion drive on city gas distribution networks is expected to fuel gas demand as it is targeting more than 35 million additional household connections and over 7,000 new CNG filling stations by 2029.