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India Prepares To Increase Natural Gas Imports

India has asked its state-run firms to increase their natural gas imports to stave off shortages next summer, three government sources told Reuters on Wednesday.

The move will place an additional demand burden on the global natural gas markets as Europe tries to protect itself from energy shortages this winter and next. India, not wanting a repeat of its power crisis of last April when it suffered the lowest coal inventories for that time of year in a decade at a time of high power demand, has identified natural gas as a critical component of its power mix when energy inventories are tight.

This year, India’s natural gas power generation has accounted for just 1.5% of the country’s total power generation—and this is declining. But running low on natural gas when other energy supplies are also tight—during peak air conditioning season, no less—could trigger another power crisis.

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Unfortunately for India, natural gas prices have skyrocketed, and purchasing natural gas now to prepare for next summer will not come cheaply. It will also compete for supplies with Europe, which continues to scrounge the global market for gas supplies from anywhere but Russia. And unfortunately for neighboring Pakistan and Bangladesh, higher prices triggered by India’s extra demand could further stretch already strained federal budgets and sink them further into debt.

India has held meetings on fully utilizing some of its natural gas-fired power-generating capabilities. India’s largest power producer, NTPC Ltd, has been asked to have 2 GW of gas-fired power plants ready to produce at full capacity next year if needed to handle the high power demand next summer.

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One of Reuters’ government sources said that the government was likely to hold meetings with private gas power producers as well.

There are no estimates yet on how much extra natural gas India will need to import. 

By Julianne Geiger for Oilprice.com

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