Owing to lower domestic production and drop in imports, India’s natural gas consumption declined by 10 per cent in August 2022, as compared to the natural gas consumption in August 2021. The natural gas consumption in August 2022 stood at 5.2 billion cubic metres (BCM) as compared to 5.8 bcm in the August 2021.
The import of liquefied natural gas (LNG) decreased by 19 per cent to 2.37 bcm in August 2022 on account of high prices and limited availability in the spot market. Given that most supplies are directed to Europe where buyers are willing to offer record-high prices ahead of winter, amid sharp supply curbs from Russia, Indian gas importers are unable to source LNG from the spot market.
The prices of LNG for Asia currently stand at $42 per mmBtu in the spot market. The rate had risen to nearly $70 in August 2022. This has made spot gas unaffordable for most customers in India. By comparison, the domestic gas price is $6.1 per mmBtu and the ceiling for gas from local difficult fields is $9.92 per mmBtu. Russia’s Gazprom, India’s key supplied, is reluctant on its long-term contract with state-run Gail for supply of 2.5 million tonnes of LNG per year thereby forcing GAIL to cut supplies to some of its customers.
A marginal drop in domestic supplies to 2.89 bcm in August from 2.92 bcm last year has worsened consumers’ woes. This is owed to a 5 per cent decline in output from Oil and Natural Gas Corporation’s fields. In the April-August period, gas consumption fell 4 per cent year-on-year while imports declined by 10 per cent. The share of imports in overall consumption decreased to 45.6 per cent in August 2022 from 50.6 per cent a year earlier.