Commercial transport, CGD network to boost Indian LNG demand: Petronet CEO

Singapore — The commercial transportation sector and the city gas distribution network offer some of the best potential to help boost India's LNG consumption in coming years, Petronet LNG CEO Prabhat Singh said Sept 8.

Singh told the Gastech Virtual Summit that long haul trucks, inter-city business as well as the CGD network would help to add about 22 million-23 million mt of additional LNG consumption in India in coming years, but it would require the support of additional infrastructure.

"The moment the infrastructure comes up, which is supported by the government, I think India is nicely poised to take advantage of the $2-$3/MMBtu gas prices and even if these prices go higher, plus/minus $5/MMBtu is going to be there for the next two to three decades. India will play a major role in the Asian market," Singh said.

He said Petronet looking into offers from global LNG suppliers to sign term contracts at prices which would be lower than spot markers.

Singh said that the government had plans in place to add another 15,000 km (9,300 miles) of countrywide pipeline to the 16,000 km that is available now. That would cost about $8 billion. In addition, while 19 million mt of LNG terminal capacity was under construction, another 10 million mt of capacity was being planned.

"So there will be nearly 30 million mt of additional LNG capacity in the next four to five years," Singh said.

Singh earlier told S&P Global Platts that with India's LNG imports expected to reach as high as 50 million mt by 2030, more than double the current 22 million-23 million mt, this would provide one of the greatest opportunities to LNG producers expanding their capacities.

He said that the government was seriously looking into the possibility of introducing a unified pipeline tariff structure, a move that would help to boost gas consumption.

Industry officials have that this would replace the existing "cascading pipeline tariff structure" under which if gas travels through several pipelines, tariff for each pipeline have to be paid. Therefore, gas becomes relatively expensive by the time it reaches a customer located at a distance from the gas source.

India's gas consumption is split between locally produced gas and imported LNG. However, a large portion of the gas which is allowed to be marketed freely is re-gasified LNG. India's domestic gas output falls under the Administered Pricing Mechanism under which it's sold at a price set by the Petroleum Planning and Analysis Cell on a half-yearly basis.

Petronet set up the country's first and largest LNG receiving terminal at Dahej in the western state of Gujarat and another terminal at Kochi in the southern state of Kerala. While the Dahej terminal's capacity was expanded to 17.5 million mt/year from 15 million mt/year earlier this year, the 5 million mt/year Kochi terminal has been heavily underutilized since it was commissioned in 2013 because of a lack of pipeline infrastructure.