The International Energy Agency (IEA) has predicted a medium-term forecast indicating that India’s natural gas demand is set to grow by four percent in 2023 and is expected to rise at an average annual rate of over eight percent until 2026. This is a significant increase in demand for natural gas in India.
The forecast also highlights that global gas demand is projected to grow at an average rate of 1.6 percent per year between 2022 and 2026. This is a decrease from the average growth rate of 2.5 percent per year observed between 2017 and 2021.
In 2023, following a six percent decline in 2022, liquefied natural gas (LNG) imports into India increased by eight percent in the first eight months compared to the previous year. The primary gas supply also increased by two percent during this period. This growth in LNG imports was partly driven by a decrease in spot LNG prices to below $15 per metric million British thermal unit (MMBTU), which stimulated demand in the industry and power sector.
Over the next five years, India is expected to add over 20 billion cubic meters (bcm) of natural gas incremental demand, with the industrial sector being the largest contributor, accounting for nearly forty percent of the total increase.India has also commissioned the Dhamra LNG import terminal with a capacity of sevenbcm per year, which increased the country’s total regasification capacity by 10 percent. Natural gas, in its liquid form as LNG, is regasified at these terminals and then transported through pipelines.
The fertiliser sector is anticipated to be a key driver of India’s growing industrial gas demand as the country plans to phase out urea imports by the end of 2025.The government has set ambitious targets to increase the share of gas in its energy consumption mix to 15 percent by 2030, up from the current six percent. Currently, India imports approximately fifty percent of its gas requirements.
Despite ongoing additions of renewable energy capacity, demand for gas-to-power is expected to grow at an average rate of 15 percent per year between 2022 and 2026, driven by improved capacity factors at existing gas power plants and growing power demand. Furthermore, the development of the distribution network and a continued push to promote the use of gas in household applications are expected to drive an average annual growth of seven percent in city gas distribution.
As reported by Business Standard, globally, the growth in natural gas demand is expected to slow down in the coming years, particularly in mature markets. China is expected to be a significant driver of global growth in natural gas demand, with approximately half of the growth attributed to China’s increasing reliance on this fuel source.
