According to Reuters, India’s LNG demand is set to rise by approximately 10% in 2019, despite import capacity increasing at a faster rate.
This disparity between measured demand and capacity is caused by the physical limits imposed by a lack of distribution infrastructure. Thus, India is only able to purchase as much LNG as it is able to utilise.
There are many factors fuelling India’s LNG growth:
- India signed the Paris Agreement in 2015, making a commitment to reduce its carbon emissions, and also aims to more than double the proportion of gas in its energy mix to 15% by 2030.
- In 2018, the country had four import terminals and imported between 21 and 23 million t of LNG – an increase of 10 to 13% from 2017.
- Over the next seven years there are plans in place for another 11 terminals, one of which was recently commissioned and two others are due for startup later this year.
- Existing import capacity is currently 35 million tpy, and post-expansions it is expected to grow to 41.5 million t by the end of 2019.
Despite this, it is clear that India will not be able to maximise its utilisation of import capacity until its distribution network catches up. However, reports suggest that there is hope of this in the near future.
Indeed, even with only 9 to 11% growth, as forecast by Wood Mackenzie and FGE, terminal utilisation will still reach approximately 60% by the end of 2019. Furthermore, India’s government has stated that it hopes to reach maximum operating capacity at all LNG terminals by 2022, as it continues to work towards the completion of its pipeline grid.
Analysts have expressed the opinion that the 2022 target is optimistic and that India will struggle to meet this, however it is a step in the right direction. One trader told Reuters, “India’s [LNG] demand will grow and has the potential to match China, but the path to get there will be slow.”
Read the article online at: https://www.lngindustry.com/lng-shipping/15032019/india-lng-demand-limited-by-infrastructure/