A weak rupee has increased the cost of liquefied natural gas (LNG) in India, resulting in a decline in imports of LNG. Demand from power stations and factories have also declined. One executive said that due to the availability of other sources of energy, demand from gas-fired plants has slowed. He said: "Good rains have improved hydropower generation, which has not compelled distribution companies to buy expensive electricity from natural gas-fired plants. Also, industrial customers are able to buy cheaper power from the spot market instead of running their natural gas-based captive power projects. Hence, the bulk of LNG consumers have reduced their demands."
Having imported a monthly medium of 0.91 million t of LNG between April and August, in July, the country imported 0.70 million t of LNG, according to the Petroleum Planning and Analysis Cell. One official noted that: "as per the historical trend, LNG price is expected to go up by 10% during winters when the western world demands more natural gas for heating. Normally, higher LNG prices in winter, encourages Indian industries to reduce their dependence on expensive imports. However, we have already started witnessing weak LNG demands for coming months."
According to the Gujarat State Petroleum Corporation (GSPC), the cost of LNG currently stands at $US 15.5/unit. This is predicted to increase. Domestic natural gas is priced at $US 4.2/unit but this is expected to double next April. As demand far outstrips demand for natural gas (and this is not expected be resolved until 2016 – 17), companies have turned to LNG despite its expense.
Edited from various sources by Ted Monroe
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