India’s LNG Imports to reduce in FY22 due to rapidly increasing Domestic Production
- 15-Mar-2022 8:28 AM
- Journalist: S. Jayavikraman
India’s Liquified Natural gas (LNG) imports have been falling since the start of 2021 in tandem with rising domestic production. The period April 21 to January 22 saw LNG production increase by 21.2% while imports saw a decline of 3.2%. as per data from Petroleum Planning and Analysis Cell (PPAC). The month of January 22 had seen imports fall by 10.8% compared to January 21 as a result of higher production and higher international prices.
Although the Indian government expects to increase its LNG import capacity by 40% in 2022, the new terminals are expected to be a further liability on the existing six terminals which have been functioning at only 20% capacity due to low downstream takeaway capacity. Domestic production increased in 2021, mainly aided by increased outputs from Reliance Industries Limited’s R cluster and satellite cluster fields in the Krishna-Godavari basin. The start of operations at Oil and Natural Gas Corporation Limited’s U1B deepwater well in August of 2021.
Nearly half of India’s gas demand is met out by imports of LNG. This dependence on imports may likely continue despite increased domestic capacity in the coming years. New LNG terminals due for commissioning in 2022 include Adani group’s 5 million ton per year LNG import terminal at Dhamra and a 1 million ton per year Karaikal LNG terminal in Southern India. Swan Energy is also likely to commission its 5 million ton per year FSRU at Jafrabad in April.
While the high import prices at present could see LNG imports lower in the first half of 2022, a further increase in India’s gas demand could help propel imports for the long term as India’s energy consumption is expected to grow further. India’s consumption had seen a growth of 7.85% year on year during the period April, 21 to January, 22. This trend is likely to continue for the next few years as India is set on a path towards rapid industrialisation over the decade.