LNG Sourcing in India in 2016
India has been relying upon the imports completely to meet its LNG requirement and strikingly have conducted domestic trade for LNG from 2012 till 2016 apart from the international trade. Majorly Indian imports were supported by Qatar which supplied the country with over 11 MT of same in 2016. Post Qatar, India imported LNG from Nigeria with close to 3 MTs of imports followed by Equatorial Guinea . Sourcing of LNG in India for 2016-17 is shown as per the countries and coupled with sourcing from re-exports are depicted in Exhibit 1.
The level of imports in India saw a continuous rise on consistent basis for four years in continuation from 2012 to 2016. The striking fact is the growth in numbers from 2015 to 2016 observed in terms of quantum of imports of LNG which went on high due to requirement of consuming industries grew. The consumption of fertilizer sector is expected to grow in near future and the quantum of imports may further rise in the country as India is pegged among high growth potential markets for LNG imports globally.
Demand-Supply Movements of LNG in India : Past Trends from 2012-2016
The demand in India for natural gas is historically driven by thermal power sector, followed by fertilizer sector, CGD sector and refining sectors etc. However the demand from the power sector went muted from 2012-13 onwards and is being overtaken by fertilizer sector in 2013-14. The fall observed in thermal power sector demand is over 16.43 MMSCMD from 2012 to 2013 levels and is hovering around ~ 30 MMSCMD mark from 2013 till 2016 and in all likely hood to remain same for 2017 as well. Remarkably the fall in thermal power sector demand has led to overall demand of natural gas in the country. Although, post 2014 Government decided to import more LNG to support the demand from the consuming sectors in the country. The sector wise consumption trend of natural gas in the country is depicted in Exhibit 2.
The demand for natural gas in India doesn’t arise only from the energy sector consumption but also from the non-energy purposes which are inclusive sectors like fertilizers, petrochemicals, sponge iron and LPG shrinkage as well. On looking upon the demand pattern the consumption from the fertilizer and petrochemical segment have consistently been on the higher side when non-energy consumption are considered for natural gas.
LNG Contributions in Meeting Industrial Demand – Both for Energy & Non-Energy Consumption
LNG historically being imported and regassified as R-LNG and then utilised for both energy and non-energy purposes in the country. From observing the trend R-LNG has been mostly consumed by thermal power sector in the energy segment and fertilizer sector in the non-energy segment in India. The levels of consumption by distinct industrial segment for the year basis the intense primary research feed factoring the industry opinions is being extrapolated and represented in terms of percentage and quantum of LNG utilization as depicted in the Exhibit 4.
Upon analyzing the feed received from the primary research which we conducted to demystify consumption of LNG and how the likelihood of the demand movements of the liquefied form of gas shall be required in India we found that the share contribution of LNG is all set to decline for thermal power segment further. With the intent of GoI to support the fertilizer segment to reduce upon the imports of urea which puts an added subsidy burden on the Government, the impetus would be on producing the same indigenously. Further, the implementation of same shall reduce the burden on the farmers. Also, with more penetration of urbanization and more impetus on smart city the demand from CGD sector is certain to rise up which at large is being supported by LNG. Further, the demand from refining sector is also set to go up and is expected that 90% of the feed shall be received from LNG in the country in coming couple of years of time i.e. by 2020. The LPG shrinkage shall also see
a contribution of close 40% from LNG in the country.