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India plans to secure long-term deals for the supply of liquefied natural gas in a bid to reduce the share of coal in its energy mix.
The biggest gas importer on the subcontinent, Petronet, is looking to secure some 12 million tons of LNG annually in additional supply under long-term deals, Bloomberg reported, citing the company’s managing director, Akshay Kumar Singh.
This additional amount is equal to almost two-thirds of India’s total LNG imports in 2022, Bloomberg added, referencing tanker tracking data.
India’s government plans to increase the share of natural gas in its power generation mix from 6 percent currently to 15 percent by 2030 and long-term deals are clearly one safe way of doing that. However, intensified competition for LNG cargoes has reduced the amount of available gas for long-term deals.
As part of efforts to boost LNG supply, Petronet will seek to increase the contracted amount of LNG it buys from Qatar by 1 million tons annually, Reuters reported, citing the managing director of the company.
Russia’s Novatek is also in talks with Indian gas importers for LNG deliveries, the chief executive of the company Leonid Mikhelson said on Monday at the India Energy Week.
India is currently expanding its gas distribution network in cities, which would drive higher natural gas demand. To respond to that demand, along with plans to reduce coal dependency, India’s government has plans to expand the capacity of its LNG import terminals by 53 percent in the next few years.
The country’s capacity to date is 22.5 million tons annually and the Modi government wants to expand this by 12 million tons.
Meanwhile, India has slipped from number four in the global top LNG importer ranking to number seven amid sky-high LNG prices prompted by Europe’s eagerness to replace pipeline Russian gas with the super-chilled fuel.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.