High prices derail India’s LNG plans [Gas in Transition]

High prices derail India’s LNG plans [Gas in Transition]

Contrary to government plans, India’s natural gas use declined last year. LNG import plans have fallen by the wayside and coal consumption has risen. [Gas in Transition, Volume 3, Issue 1] by: Ross McCracken

India’s LNG imports have slumped over the last 18 months, hit by rising prices both before and after Russia’s invasion of Ukraine. Based on data for January-November, LNG imports look likely to have ended 2022 almost 14% down on the previous year. At around 21 million mt, India’s LNG imports only exceeded long and short-term contract volumes by 1 mn mt. LNG imports also fell in 2021, by 6.4%, mostly concentrated in the latter half of the year, which saw a year on year decline of 10.5%, compared with 2.1% in the first half. The data highlights the price sensitivity of the Indian gas market as LNG spot prices rose sharply in the latter half of 2021. In the event, reduced LNG imports were compensated for by a significant jump in domestic gas production, which rose from 27.6bn m3 in 2020 to 32.4 bn m3 in 2021, according to data from India’s Petroleum Planning and Analysis Cell. However, a more modest increase in 2022 was insufficient to offset the larger drop in LNG volumes. As a result, having risen by abo...