Page 4 - AsianOil Week 04 2023

AsianOil COMMENTARY AsianOil

Indian gas ambitions at risk

Despite the government’s goals, Indian gas consumption is declining and coal

consumption is rising.

INDIA INDIA embraced LNG as a means of provid- growing from just above 1bn tonnes in 2022 to
ing its economy with cheap and clean energy 1.22bn tonnes in 2025.
WHAT: that can reduce its coal use. But its imports have Most of this coal will be sourced domesti-
Indian gas consumption slumped over the last 18 months, as a result of cally. National coal output topped 800mn tonnes
and LNG imports are soaring international prices. Supplies were down in 2021 and is forecast to exceed 1bn tonnes
falling. 14% year on year in January-November of last in 2025. India’s draft national electricity plan
year at 21mn tonnes. foresees a further 25 GW of coal-fired power
WHY: LNG imports also dropped in 2021 by 6.4%, capacity being developed by 2026-2027, despite
High prices are subduing with most of this decline occurring in the latter the hoped-for expansion in gas use as well as
demand. half of the year, as this was when global prices renewables.
began rising to historic highs. The drop was off- International LNG prices are set to remain
WHAT NEXT: set by a growth in domestic gas production, from very high for at least a few more years. But if
India will struggle to 27.6 bcm in 2020 to 32.4 bcm in 2021, according India’s gas targets are to be reached, LNG will
reach its target for to state statistics. have to serve a vital role.
expanding gas use to A more modest rise in domestic supply last Several major international gas pipeline
15% of the energy mix by year was not enough to make up for the loss of projects have been proposed, such as the Turk-
2025, meaning more coal LNG, however. Overall gas supply for the coun- menistan-Afghanistan-Pakistan-India (TAPI)
use for longer. try dropped by 3.7 bcm in 2022, compared with pipeline, but it is questionable whether they will
a rise of 2.5 bcm in the previous year. be realised. Discussion of TAPI has been ongo-
Officially, the government’s environmen- ing for decades, but actual progress has been
tal and economic strategies remain focused on intangible.
expanding the share of gas in the national energy Russia is hoping to advance new pipeline
mix to 15% by 2025, versus 6.8% in 2020. But the projects to Russia, in response to the loss of the
share actually shrank in 2021, to only 6.3%, while European market and sanctions complicating
coal use increased. Coal consumption rose 14% efforts to expand the country’s LNG industry.
in 2021 and a further 7% in 2022, according to But while a Russia-India pipeline has been pro-
the International Energy Agency (IEA). Coal- posed, the distance and terrain involved, and
fired power plants continue to provide around India’s distrust of neighbouring countries, would
half of India’s power generation capacity, and make this plan difficult to implement.
the IEA predicts that coal demand will continue Meanwhile, there are limited prospects for

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