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lng: Domestic natural gas consumption surges owing to favorable international prices


New Delhi: Domestic natural gas consumption rose 9% in December over last year, aided by softer international prices.
Import of liquefied natural gas (LNG) jumped 12% year-on-year in December, according to the official data. LNG prices in the international markets have dropped as mild winter and high levels of storage in Europe have weakened demand for the fuel.Japan/Korea marker, the benchmark for the North Asian spot LNG market, has dropped to about $10 per mmbtu from an average of $18 in October. LNG rates usually rise in winter, with more gas needed for heating. The average price in January of 2023 was $19 per mmbtu.Higher prices hurt India’s LNG imports and overall gas consumption last fiscal year. Demand recovered this fiscal year as prices normalized. LNG imports are up 14% year-on-year in the April-December period while total gas consumption in the country is higher by 9.4%. Imports account for 46% of total domestic gas consumption.

Indian companies are again tapping the spot LNG market as demand has returned, a gas industry executive has said. Experts expect LNG prices to remain soft in 2024 on healthy US LNG exports, flat European demand, and high storage. An expected LNG carriers glut in 2024 will keep freight low, they said.

Domestic production of natural gas rose 6% in December. For the April-December period, it expanded 5%. New output from fields operated by private players is helping boost the domestic gas supply.

India aims to increase the share of natural gas in its primary energy mix to 15% by 2030 from the current 6%. It has laid a wide network of gas pipelines and built a fleet of LNG import terminals to let imported gas reach more and more customers.

Indian gas marketers are also tying up with global gas suppliers for long-term purchase deals. GAIL, the nation’s largest gas marketer and transporter, announced earlier this month a 10-year deal with global trader Vitol for the purchase of 1 million tonnes of LNG annually.


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