News Oil & Gas

lng: Most LNG import terminals in India underutilised


Most of India’s liquefied natural gas (LNG) import terminals are deeply underutilised as capacities have expanded at a far faster pace than the domestic gas demand.

Of the seven LNG terminals, three have operated below 20% of their capacity and another three below 40% in the first half of the current fiscal year, according to the oil ministry data. Just one terminal at Dahej in Gujarat has operated above 90%.

Dahej terminal is India’s largest facility with a capacity of 17.5 million tonnes per annum. Five other terminals have a capacity of about 5 million tonnes a year each while one has about 3 million tonnes capacity.

Dahej terminal is operated by Petronet LNG, a company controlled by state-run oil and gas companies, which are also its long-term customers. This terminal has been a beneficiary of the long-term contract Petronet has with Qatar for the import of 8.5 million tonnes of LNG annually. Prices have been less volatile under long-term contracts and ensured buyers for such gas.

Dhamra terminal, the youngest terminal, also has long-term contracts with some state-run companies. Under long-term contracts, customers must pay terminals for the capacity they have booked even if they are not using it.

Some terminals have been affected by the inadequacy of the pipelines connecting them to demand centres. Industry executives feel capacity utilisation will rise once the pipelines are in place.The bigger reason for inadequate business for terminals is the slow rise in domestic gas demand compared to the doubling of LNG terminal capacity. Import terminals have expanded from about 21 million tonnes a year at the beginning of 2015 to about 46 million tonnes a year now. Over the next few years, the overall LNG terminal capacity is expected to rise to 65 million tonnes a year.In eight years between 2013-14 and 2021-22, domestic gas consumption rose 23% while LNG imports rose 75%.


Source link