India’s natural gas consumption is set to rise by 8.5 percent in 2024, driven by increased demand from the power and industrial sectors, according to the International Energy Agency (IEA).
The IEA’s Q3 2024 gas market report forecasts an 8.5 percent increase in India’s natural gas demand for the full year, largely due to higher usage in power generation and industry. Liquefied natural gas (LNG) imports are expected to grow by 17 percent year-on-year in 2024.
Previously, the Q2 2024 report projected a 7 percent annual growth in gas consumption. In 2023, India’s gas consumption was 60.12 billion cubic meters (BCM).
As the fourth-largest LNG importer globally, India consumed 66.63 BCM of natural gas in FY24, up from 59.97 BCM in FY23 and 64.16 BCM in FY22. According to the Petroleum Planning & Analysis Cell (PPAC), the country’s primary gas supply (domestic production and LNG imports) increased by an estimated 10 percent year-on-year in the first five months of 2024, continuing the recovery from a 7 percent increase in 2023.
This growth was supported by an eight percent rise in domestic production and an 11 percent surge in LNG imports in the first five months of 2024, the IEA noted. During this period, the fertilizer sector accounted for 28 percent of demand, followed by city gas (20 percent), power generation (14 percent), and refining (9 percent). Overall gas demand increased by 21 percent year-on-year.
Refineries, power generation, and city gas distribution were the primary contributors to this increase, the IEA reported. In May 2024, India’s LNG imports reached a record 3.3 BCM, a 23 percent increase month-on-month, with balanced contributions from spot and contract purchases.
Qatar supplied 45 percent of India’s LNG imports in the first five months of 2024. However, the year-on-year increase in supply mainly came from Angola and the US. The IEA anticipates that continued spot buying will bring 2024 imports close to the 2020 record high of approximately 37 BCM.
India, like other South Asian countries, experienced extreme heat and record temperatures in April and May, leading to higher electricity consumption for cooling and significant stress on the power supply infrastructure.
Despite natural gas’s relatively low share in India’s electricity mix (2-3 percent), gas-fired power generation has surged recently. Grid India data indicates that gas-fired power generation in April and May was more than double that of the same period last year. This was due to high cooling demand during the heatwave and an emergency clause that reactivated idle gas-fired power plants to prevent power cuts during the 43-day elections ending on May 28.
Gas-based power plants achieved a plant load factor (PLF) of 28.7 percent in May 2024, the highest in the last five years, surpassing the 28.9 percent PLF recorded in May 2020. Gas based power generation increased by 83 percent year-on-year and 39 percent month-on-month to 2.8 billion units (BU) last month.
As reported by thehindubusinessline.com, overall power generation rose by 15 percent year-on-year to 167.55 BU. During the peak electricity demand month of May 2024, the share of gas-based power plants, with a monitored capacity of almost 25 gigawatts, nearly doubled to 3.1 percent of India’s total generation, compared to 1.6 percent a year ago, according to Crisil Market Intelligence and Analytics.
