India is planning to expand its import capacity for liquefied natural gas by 12 percent by building a new floating import terminal in the western state of Gujarat.
The terminal is due to become operational next year, Reuters reports, and will bring India's total LNG import capacity to 47.5 million tons annually.
India last year consumed 25.7 million tons of liquefied natural gas, a 14-percent increase on 2019, according to Wood Mackenzie. Demand is likely to continue to grow in the coming years although there will be constraints related to prices. Just as with oil, India is no fan of expensive commodities, so if the current rally on the spot LNG market persists, Indian buyers' appetite for the superchilled fuel will likely be dampened, at least temporarily.
Over the longer term, however, LNG has a promising future in one of the world's biggest energy importers, hence the 5-million-ton new import facility. India has plans to boost the share of natural gas in its energy mix to 15 percent by 2030 in order to reduce its carbon footprint. Currently, natural gas accounts for just 6.2 percent of energy consumption.
This has made natural gas investments an attractive opportunity for energy businesses such as Swan LNG, which is building the Gujarat facility. State-owned energy majors including Indian Oil Corp., Oil and Natural Gas Corp. (ONGC) and Bharat Petroleum Corp. have already leased 1 million tons annually in import capacity at the Swan LNG terminal.
Asia has been driving demand for LNG recently as economies there emerge from pandemic restrictions. This has pushed LNG prices on the spot market significantly higher, even diverting cargos of the fuel from Europe and draining LNG in storage in Spain earlier this month. Demand is seen to continue strong in the biggest market for LNG as more countries there join the energy transition and seek to reduce their emissions footprint.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More