India may build LNG terminals faster, but demand likely to still be sluggish

New Delhi: Even as India adds import capacity at a faster pace, India's requirement for liquefied natural gas (LNG) will increase by only 10 percent in 2019. This is because infrastructure constraints keep gas from reaching consumers and thwarts growth rates. While India made a commitment in the 2015 Paris Agreement to cut down carbon emission intensity of the economy by one-third, the nation also aims to more than double the share of gas in its energy mix from 6.2 percent now to 15 percent by 2030.

As per data from the Petroleum Planning and Analysis Cell and shipping data, there were four terminals transporting LNG in India last year, receiving 21 million to 23 million tonnes of the super-chilled fuel. The current capacity marks an increase of around 10-13 percent from 2017.

Govt to develop 11 more terminals in 7 yrs

The government is looking at developing 11 more terminals in the coming seven years. One of those was commissioned in March, and two more are set to start up later in 2019.

"The strongest growth rate is expected in city gas demand, primarily due to an increase in consumption by commercial users on the back of growth in city-gas infrastructure," said Poorna Rajendran, senior analyst for consultancy FGE.

India's LNG infra may remain underutilised

With the current terminal capacity standing at 35 million tonnes a year and additions and expansions likely to push it up to 41.5 million tonnes by the end of the year, most of India's LNG import terminals will possibly be underutilised for the coming years as the demand is expected to rise only to 10 percent.

India's LNG demand is expected to grow to approximately 25-26 million tonnes this year, owing to demand from city gas distribution and transportation, analysts from Wood Mackenzie and FGE said.