Carrying 1.2 lakh tonne of natural gas at 1600C, the LNG tanker, Meridian Spirit, pulled up at Gail’s re-gasification plant at Dabhol on March 25. The 900-ft-long vessel had concluded its 25 day long voyage, bringing in India’s first-ever cargo of imported gas from the US.
Meridian Spirit’s shipment is part of a sale and purchase agreement between the state-owned Gail and US-based Cheniere Energy. Over the next 20 years, India will import 35 lakh tonne of LNG every year from the US at a cost of $548 million per year till the contract runs out.
India’s ambitious plans for the gas sector aims to more than double the share of natural gas to 15% by 2030. That will come on the back of a 7.2 % CAGR in the country’s gas consumption to 115 billion cubic meters (bcm) for the next 12 years.
But, India’s current gas production is not sufficient to even meet the presentrequirement. In FY17, India produced 31 bcm of gas, which was just enough to cater to 62% of the requirement. Domestic gas production has declined by 40% since 2010. After hitting a peak of 50 bcm in 2010, India has been producing just about 30 bcm of gas for the last three years. This pitiable situation is due to decrease in output at Reliance’s KG basin field and ONGC’s maturing fields. By 2022, domestic gas is expected to rise to 41 bcm, yet it will be inadequate to meet even the present demand (See: Stepping on the gas).
Imports is the other alternative. Even though landed price of LNG at $8 mmbtu is 2.6x the price of domestically-produced gas, the government is looking at imports to bridge the gap. At present, India is operating with four re-gasification terminals owned by Petronet LNG, Shell and Ratnagiri Gas and Power, which have a combined capacity of 250 lakh tonne. There are not enough terminals that can store imported LNG and re-gasify it for end-use.
Despite the challenges, the government wants to reduce India’s reliance on crude oil and instead, focus on natural gas, a cleaner and less expe