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Indian LNG import growth reliant on pipeline completion

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LNG Industry,

According to the US Energy Information Administration (EIA), growth in India’s LNG imports will depend on the completion of connecting pipelines. The following is a summary of the EIA’s latest analysis on this subject.

India has been the world’s fourth-largest importer of LNG since 2011 and, in recent years, LNG imports have grown from 31% of the country’s natural gas supply in 2012 to more than 50% in 2019. This spike in LNG imports has been driven by declining domestic natural gas production (4.4 billion ft3/d in 2012 to 2.9 billion ft3/d in 2019) and growing consumption, particularly in the industrial sector (where natural gas is used in the production of fertilizer) and the City Gas Distribution network.

In response to this growing demand, earlier this year, India commissioned its sixth LNG import terminal. This action means that there are now four LNG import terminals under construction in the country, and they are all expected to come online by 2023. These terminals will add 2.5 billion ft3/d of LNG import capacity, bringing the country’s total regasification capacity to 5.2 billion ft3/d.

From this point, future growth in India’s LNG imports is contingent on connecting LNG regasification terminals on coasts to demand centres further inland via pipeline. Northwestern India has a highly developed natural gas infrastructure, and thus Hazira and Dahej are the most highly utilised terminals in India (at 97% and 110%, respectively). However, the southern and eastern regions of the country lack pipelines to move natural gas from coastal LNG import terminals to major demand centres further inland. This lack of pipeline infrastructure near LNG terminals is affecting both existing and planned LNG terminals. For example, in southwestern India, LNG imports to the existing Kochi terminal are currently limited to local markets.

In order to address this issue, pipelines expanding the Kochi terminal’s supply range to nearby Mangalore are under construction and are expected to come online in 2020. Following this, pipelines expanding to Bangalore are expected to be completed in 2022. Similarly, new pipelines are being planned to connect the existing Ennore LNG terminal to areas beyond nearby Chennai. In northeastern India, new pipelines that are planned to come online within the next three years would connect the Dhamra LNG terminal, currently under construction, to nearby Kolkata, as well as existing pipelines in northwest India.

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