Gas consumption is growing faster than any other fuel in India, and LNG imports are expected to play a major role, doubling by 2010 according to Honolulu’s FACTS Inc. In the report India’s Natural Gas Sector: Focus On LNG, FACTS estimates that Indian gas consumption averaged 2.458bn cfd in 2002 and 2.77bn cfd in 2003, and is expected to reach 3.321bn cfd in 2005: “With new gas finds, expanded transmission and distribution, and the development of multiple LNG terminals, natural gas use is projected to continue to expand rapidly through the next decade, to approximately 5bn cfd in 2010 and 6.8bn cfd in 2015.”
The report notes that India’s first LNG imports were delivered from Qatar’s RasGas plant to Petronet’s Dahej terminal in January 2004, and that Shell’s 2.5mn tons/year capacity Hazira terminal received its first imports in April 2005 from Australia’s Northwest Shelf project. A number of other LNG terminals have been proposed, at Kochi, Mangalore and Ennore, while a terminal at Dabhol is due online in 2H06. However, natural gas is in competition with coal: “Gas pricing is a key issue in evaluating the potential growth in India’s gas market. Gas must be priced in the $3-4/mn BTU range to be competitive with coal.” Power generation is expected to be the main driver of Indian gas demand growth, with the sector’s consumption predicted to average 1.389bn cfd in 2005 and to rise to 2.2bn cfd in 2010. Likewise industrial consumption is expected to grow, from 726mn cfd in 2004 to 799mn cfd in 2005, expanding to 1.135bn cfd by 2010. Industrial demand will mainly be as a replacement for naphtha as a petrochemicals feedstock.
“Total LNG imports stood at 254mn cfd (1.95mn tons) in 2004,” says the report, “and are slated to increase to 718mn cfd (5.5mn tons) by the end of 2005, as the Dahej terminal accepts larger volumes and the Hazira terminal is also operational. By 2010, LNG imports are expected to climb to 1.5mn cfd (13mn t/y) as the Dabhol and Kochi terminal are also expected to be operational.” Besides LNG imports, the report observes that the growing gas demand has led to proposals for a number of gas pipeline import projects, including the Bangladesh-India pipeline, the Iran-India pipeline, a Turkmenistan-Afghanistan-Pakistan pipeline with an extension to India, and the Myanmar-India pipeline: “All of these projects face political challenges, but the Myanmar-India pipeline via Bangladesh appears to be the most feasible at this point.”
