The One Factor That Will Determine The Size Of India's LNG Boom

India, the fourth-largest importer of liquefied natural gas (LNG) in the world, will boost its imports by one-third over the next three years, but the import growth will depend on the state of the land gas pipeline network development, the U.S. Energy Information Administration (EIA) said in an analysis on Friday.

India, which doesn’t import natural gas via pipelines, has been increasingly relying on LNG imports for its fast-growing gas demand while domestic production is steadily declining.

India’s LNG imports have increased to represent more than half of its natural gas supply last year, up from 31 percent of gas supply back in 2012, according to EIA estimates.  

To meet rising LNG demand and imports, India commissioned earlier this year its sixth LNG import terminal and is building another four facilities expected to come online by 2023.

Yet, India’s LNG import growth will not only depend on the pace of LNG import and regasification terminals construction, but also on the speed at which the country will be building gas pipelines to carry the gas from its coasts to the landlocked areas of demand, the EIA said.

“The construction of domestic pipelines to move LNG from the coastal import facilities to major demand centers further inland has experienced delays. Future growth in India’s LNG imports will depend on the timely completion of natural gas pipeline networks,” according to the EIA.

During the current lockdown, India’s LNG importers were said to have declared force majeure on imports.

According to a Wood Mackenzie analysis this week, India will see a V-shaped recovery in LNG imports from the middle of June, despite the fact that industrial demand has significantly slowed down during the lockdown.

Before the lockdown, India’s “increased spot purchases were a rare glimmer of hope in the increasingly oversupplied LNG market,” WoodMac said.  

By Tsvetana Paraskova for Oilprice.com

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