LNG, Natural Gas, Electric Power, NGLs

February 21, 2025

IEW 2025 INTERVIEW: India's MGL FY 2025-26 gas sales volumes to rise over 8%, says VP

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HIGHLIGHTS

Industrial, commercial segment to grow over 15% in FY 2024-25

MGL subsidiary commissioning more LNG stations

China LNG tariff may prompt US to find other markets including India

India's Mahanagar Gas Limited, one of the country's top natural gas distribution companies, expects its gas sales volumes to rise more than 8% in the financial year 2025-26 as the company pursues both organic and inorganic growth, and advances its diversification strategy, a senior MGL executive said.

The financial year runs from April 1 to March 31.

"Our total volumes in FY 2024-2025 is expected to be around 4.23 million standard cu m/day (including Unison Enviro Private Limited), of which compressed natural gas [CNG], volumes are around 3.04 million standard cu m/day and we see significant demand growth going forward," Manas Das, MGL's vice president of business development, business information systems, commercial, and strategic transformation unit told Platts in an interview at the India Energy Week 2025.

Platts is part of S&P Global Commodity Insights.

India's city gas distribution segment includes CNG to the automotive segment and piped natural gas, or PNG, to customers in domestic, industrial and commercial segments.

As of Jan. 31, MGL had 366 CNG stations. In PNG, the company has seen "significant" growth in the industrial and commercial segment, which is expected to grow more than 15% in FY 2024-25, Das said.

According to a company statement, MGL had 4,997 industrial and commercial customers as of Jan. 31.

The industrial segment has grown despite the challenges of catering to too many customers who do not have large volume requirements and the fact that alternative fuels are cost-competitive, Das said.

"We have a policy that we can offer prices closer to the alternative fuels that they may want to use," Das added.

In addition to organic growth, MGL is also seeking acquisitions and partnerships.

MGL, through its subsidiary -- Mahanagar LNG Private Limited -- has formed a joint venture with Baidyanath LNG Private Ltd to develop LNG infrastructure for the transportation sector.

Mahanagar LNG commissioned its first LNG station at Aurangabad in October 2024. It is clocking about 3-4 mt of LNG per day, Das said.

"Now we are opening other stations too. Initially, a total of six LNG stations are targeted, and going forward we can expand beyond Maharashtra into other nearby states too," Das said.

In 2024, MGL completed its acquisition of UEPL to expand its CGD business. In the same year, MGL also announced its plan to diversify into lithium-ion cell manufacturing by entering a collaboration with US' International Battery Company, Inc.

"We are also focusing on segments like commercial vehicles because they consume more gas, and we are trying to offer incentives to attract more commercial vehicles," Das said

Opportunities and challenges

Positive developments in India's CGD sector include the establishment of requisite infrastructure, the allotment of geographical areas to various entities for carrying out operations, the launch of newer vehicle models in the CNG segment, and other supportive policies such as diverting domestic gas from non-priority sectors to meet CNG and PNG requirements, Das said.

On the LNG front, India has a regasification capacity of about 47 million mt/year. However, terminal utilization is low.

Some deliberations to boost the uptake of gas might include the removal of the excise duty and bringing gas under the goods and services tax, offering production-linked incentives, and supporting the CNG sector through a promotional mechanism like the one for EVs, Das said.

In 2024, the administered price mechanism, or APM, allocation was reduced in two tranches in October and November across all CGDs, forcing many CGD players to purchase large volumes of regasified LNG in the domestic market.

Platts reported that these volumes were purchased at an average price of around $13.2/MMBtu ex-terminal.

Platts assessed WIM for April at $14.238/MMBtu Feb. 21, at a discount of 12.3 cents/MMBtu to the April JKM assessment.

Part of the lost volumes were reinstated later. Currently, MGL has a 100% APM allocation for domestic gas and about 50% allocation for its CNG sales volumes.

In the last few years, global gas markets have experienced significant volatility because of geopolitical issues, Das said.

However, people have realized that these are sudden shocks and have devised strategies to tackle the situation. For example, Europe has adopted the strategy of building up alternate supplies, diversifying sources, and enhancing storage, Das continued.

India is also adopting a multipronged fuel and sourcing strategy. The government seems positive about the CBG segment and is also taking steps for enhanced oil and gas recovery, Das noted.

Also in the global LNG markets, the Trump administration's order in January for the US to resume processing of export applications for LNG export projects would mean that US exports of LNG would be much higher, Das said.

At the same time, the tariff war between the US and China has recently resulted in the latter recently announcing a 15% tariff on LNG imports from the US.

So, the US inflow of gas into China will also likely be impacted, and US supplies will have to find an alternative market, which could possibly be India, according to Das.

In addition, Qatar is also building up significant volumes. So, going forward Das believes LNG volumes are certainly going to pick up in the country.

India's LNG imports are projected to reach 43 million mt/year by 2029, roughly 60% higher than 2024 imports, analysts at Commodity Insights projected in a February report. The city gas distribution, refinery, and industrial sectors are expected to be the primary drivers of growth in sectoral demand, they said.


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