India sources about 6 per cent of its energy from natural gas, as against the world average of about 25 per cent, signifying the immense scope for market expansion. However, the dependence on imports for the country’s energy needs has increased in the past few years. Domestic gas production has been declining, falling short of the growing demand, thereby pushing up imports in the form of liquefied natural gas (LNG). Natural gas production has reduced from 32,247 million metric standard cubic metres (mmscm) in 2015-16 to 31,180 mmscm in 2019-20. At the same time, consumption has increased from 52,516 mmscm to 63,932 mmscm, registering a compound annual growth rate (CAGR) of 5.04 per cent. At present, nearly half the gas demand is met through LNG imports. During the period 2016-20, LNG imports have increased from 21,389 mmscm to 33,680 mmscm, a CAGR of 12.02 per cent.
The increased imports have paved the way for ramping up LNG receiving terminal capacity in the country. At present, seven LNG terminals with a combined capacity of 29 million tonnes per annum (mtpa) are in the pipeline. There are six existing onshore LNG regasification terminals with a total nameplate capacity of 42.5 mtpa, namely, Petronet LNG Limited’s Dahej and Kochi terminals, Shell’s Hazira terminal, Konkan LNG’s Dabhol terminal, Indian Oil Limited’s Ennore terminal and the recently commissioned Mundra terminal which is jointly owned by the Gujarat State Petroleum Corporation and Adani Enterprises. The Dahej LNG terminal set up by Petronet LNG was Southeast Asia’s first LNG receiving and regasification terminal and has a nameplate capacity of 17.5 mtpa. It meets almost 40 per cent of the country’s gas requirements and accounts for 75-80 per cent of the LNG imports.
SSLNG plans
Despite an increase in domestic gas production, dependence on imported gas is expected to increase substantially in the future. Moreover, the pipeline network to meet the present demand is inadequate and needs to be expanded further, connecting the eastern and northern areas. In this scenario, small-scale LNG (SSLNG) has emerged as a viable option for serving end users in remote areas and those that are not connected to the main pipeline infrastructure. SSLNG stations/facilities can effectively cater to residential, commercial, transport and industrial consumers. In 2019, around 90 billion tonnes of LNG was supplied through road tankers to existing liquid to compressed natural gas (LCNG) stations and to other remote industrial consumers from the Dahej, Ennore and Kochi terminals. At present, LNG is being supplied to about 50 industrial/LCNG operators from the existing terminals. The total LNG output from the eight truck loading facilities at the three LNG terminals (Dahej, Ennore and Kochi) is 0.4 mtpa. Further, four LCNG stations have been set up at different locations. These are at Vadodara (Gujarat), Ratnagiri and Nagpur (Maharashtra) and Bhubaneswar (Odisha). Another LCNG station is being set up in Bhopal by Think Gas Distribution while an LCNG mother station is being set up in Thiruvananthapuram. Besides, city gas distribution (CGD) companies too have plans to set up 30 new auto LCNG/LNG stations across the country.
SSLNG has become an ideal solution for addressing the short-term fluctuations in demand. Government-led initiatives such as the recognition of LNG as an automotive fuel, and amendments in the Gas Cylinder Rules and the Static and Mobile Pressure Vessels Rules to support the supply chain of LCNG stations have been enablers in creating an efficient ecosystem for SSLNG development. Further, the Petroleum and Natural Gas Regulatory Board’s recent announcement permitting an entity to set up an LNG station in any geographical area (GA), even if it is not the authorised entity for that GA, is expected to create new opportunities in the LNG and SSLNG segments. This will further help in the faster realisation of gas demand in areas that are not connected to the pipeline grid.
Given the challenges that India continues to face with regard to enhancing its gas transportation pipeline connectivity, developing LNG infrastructure and diversified ways of transporting and distributing natural gas is of the utmost importance. In order to ensure gas supply to the remotest parts of the country, development of an SSLNG supply chain supported by cryogenic containers transported by roads, railways and inland waterways is the need of the hour. Equally important is the need to set up a robust infrastructure for LNG imports and regasification in order to meet the rising gas requirements of the country.
