Indian Natural Gas Demand Will Further Decrease Due to High Import Prices and Limited Availability from Domestic Sources
The demand for Indian natural gas will further decrease because of the high prices of imports and the limited availability of domestic sources. About 10 percent of the Natural gas consumption rate declined in the month of August 2022 due to the extremely high prices of imports and low production. The consumption declined to about 5.2 billion cubic meters, which was around 5.8 billion cubic meters in the previous year.
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Because of the high-cost evaluations and inadequate availability in the spot market, the imports of Liquified natural gas (LNG) dropped from 19 percent to 2.73 billion cubic meters in August.
Since most supplies are going to the European countries where the customers are willing to pay high record prices due to steep supply limits from Russia, with this the Indian gas importers are unable to obtain LNG from the spot market.
Currently, for Asian customers, the benchmark price of Liquefied Natural Gas is USD 42 per MMBtu. In August 2022, the rate increased by nearly USD 70, which resulted to be unaffordable for most of the customers.
The biggest gas supplier in India is Qatar which is also linked with crude oil production and imported nearly between USD 13- USD 14 per MMBtu. In August there was a marginal decline of about 2.89 BCM in domestic supplies, which was nearly 2.92 BCM in the previous year. This drop was due to the 5 percent decrease in the outputs of ONGC’s field and the increase in the production from the privately held sectors. Gas consumption declined by 4 percent whereas imports declined by 10 percent between the period April and August. Indian Natural gas is set to cost almost double in the upcoming month. From October 2022, it is approximated that domestic gas prices will increase to approximately between USD 10.5 to USD 11 per MMBtu. As per the market experts, liquefied natural gas’s long-term contract availability in India will be the main concern in the upcoming years. This gives a conclusion to India for reconsidering the reference prices and the current pricing formula.
Only city gas distributors have seen major growth, whereas the consumption decreased by 10 percent for the power supply, and 6 percent from the fertilisers among all the gas consuming sectors. As per the company’s disclosures, to meet the shortfall in the distribution of natural gas, the city gas distributors like Mahanagar Gas Ltd. and Indraprastha Gas Ltd. were pushed and forced to mix the LNG.
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As per procurement resource, with the elevated cost evaluations of imports and lesser disposal from domestic resources, the prices of natural gas in India are approximated to reduce. In the month of August 2022, 10 percent of the utilisation rate dropped for Indian natural gas. It is predicted that the prices of Indian domestic gas will hype up nearly between USD 10.5 to USD 11 per MMBtu in the month of October, and the Indian natural gas market will observe its cost to get doubled than before.