The government aims to raise the share of natural gas in its energy basket to 15 per cent by 2030 from the current 6.3 per cent. While natural gas consumption in India has been increasing, the rate of domestic gas production has been declining significantly. According to data available with the Petroleum Planning and Analysis Cell, Ministry of Petroleum and Natural Gas, production has decreased from 31,897 million metric standard cubic metres (mmscm) in 2016-17 to 28,672 mmscm in 2020-21. At the same time, consumption has increased from 55,697 mmscm to 60,646 mmscm, registering a compound annual growth rate (CAGR) of 2.15 per cent. This has led to a significant rise in the dependence on imports.
At present, nearly half the gas demand is met through liquid natural gas (LNG) imports. During the period 2017-21, LNG imports increased from 24,849 mmscm to 32,861 mmscm, at a CAGR of 7.24 per cent. In the global market, the largest importing regions were Asia Pacific and Asia, wherein the import figures stood at 131.7 million tonnes (mt) and 114.5 mt respectively. The biggest importers were Japan (76.87 mt) and China (61.68 mt). India was fourth with 23.98 mt of LNG imports.
With a view to curb the rising LNG imports, and keeping in line with the government’s agenda of moving towards a gas-based economy, the country’s LNG receiving terminal capacity is being steadily ramped up. Further, new pipelines are being laid to transport the fuel, and city gas infrastructure is being expanded to take the fuel to consumers.
Currently, the west coast of India has three principal terminals, two in Gujarat and one in Maharashtra. These terminals account for approximately 75 per cent of the country’s overall import capacity. Besides these, there is another terminal at Mundra – also in Gujarat – owned jointly by the Gujarat State Petroleum Corporation (GSPC) and the Indian conglomerate Adani Group. The Indian Oil Corporation also owns a terminal at Ennore, near Chennai, on India’s east coast. GSPC’s LNG terminal at Mundra and Indian Oil’s Ennore LNG terminal were both commissioned in 2018-19 and are now ready for operation. Other than the existing regasification terminals, 35.5-36.5 mmtpa of LNG regasification infrastructure is currently being planned or is under construction by various developers. Some of these planned developments are still subject to technical and commercial feasibility studies.
ssLNG plans and network
Given the dependence on imported gas expected to increase substantially in the near future and an inadequate pipeline network for meeting the present demand it is essential to come up with alternatives to supply natural gas across the country. Under such conditions, small-scale LNG (ssLNG) has emerged as a viable option for serving end users in remote areas and areas that are not connected to the main pipeline infrastructure. ssLNG stations/facilities would enable catering to residential, commercial, transport and industrial consumers. ssLNG promotes the direct use of LNG in its liquid form, rather than the traditional model of regasification and subsequent introduction into the gas transmission grid.
ssLNG is a nascent industry with the potential to help improve the low share of natural gas in India’s primary energy supply. In 2020, nearly 100,000 mt of LNG was supplied through road tankers to existing liquid to compressed natural gas (LCNG) stations and other remote industrial consumers from Dahej, Ennore and Kochi terminals. Currently, LNG is being supplied to nearly 50 industrial/LCNG operators from existing terminals. The total LNG output from the eight truck loading facilities at the LNG terminals is 0.4 million tonnes per annum (mtpa). Under an ssLNG network, the LNG is ferried in containers by road or rail (or on waterways) from LNG import terminals and is regasified at consumer sites.
In January 2021, Shell launched its first ssLNG supply project in India, a truck loading unit at its LNG terminal in Hazira, Gujarat. While gas customers in industrial clusters are expected to be the primary beneficiaries, ssLNG will also support the market seeding and development of recently licensed city gas distribution (CGD) geographical areas that are not yet connected by pipelines. Innovative supply solutions such as LNG by trucks are expected to play a pivotal role in the development of gas markets across the country, including the hinterland. The ssLNG supply infrastructure is expected to allow for faster adoption of LNG as the preferred transportation fuel for vehicles, especially for long-haul transport.
In another development, Inoxcva and Mitsui have signed an MoU in India. The deal entails the deployment of ssLNG infrastructure, including logistics and receiving facilities. Inoxcva has installed more than 35 ssLNG facilities across the country. The firms’ tanker fleet, under its brand GoLNG, supports these facilities. As of April 2021, the fleet has logged more than 6.5 million km and distributed about 100,000 tonnes of LNG to customers in India. Inoxcva has also tested its newly developed LNG dispensers at Petronet’s Dahej and Kochi terminals.
Around 15 truck loading bays are coming up in the country, meant to send out 0.75 mtpa of LNG. With these, the number of truck loading facilities in the country will reach 26, and it will be possible to send out a total of 1.15 mtpa of LNG in the future. Shell also plans to have an LNG truck loading unit, and supply LNG loaded on trucks to industrial units such as power plants, fertiliser and petrochemical plants, among others. Multiple truck loading bays are also planned to be added in the next phase of the Karaikal LNG terminal.
Some of the challenges faced by ssLNG facilities are the lack of economies of scale, the need for multiple clearances for the development of ssLNG infrastructure, exclusion of natural gas from goods and service tax, difficulties in LNG transportation, and lack of skilled labour.
The road ahead
With India heading towards a gas-based economy, it is imperative to set up a robust infrastructure for LNG imports and regasification in order to meet the rising gas needs of the country. With ssLNG witnessing growing interest in the past few years, it is rapidly gaining traction as an alternative and more flexible solution for supplying natural gas. The development of an ssLNG supply chain, supported by cryogenic containers transported by roads, railways and inland waterways, is the need of the hour.
Several gas companies, including CGD operators, have made plans to set up LNG satellite/LCNG stations for faster realisation of existing demand and to access newer markets. Moreover, India is planning a network of LCNG/LNG fuelling stations along its 6,000 km long Golden Quadrilateral highways to build an effective ecosystem for LNG-fuelled vehicles in the country. As per industry experts, the ssLNG segment can add up to 7-10 mtpa of LNG demand by the year 2025. Road transportation (including the CNG segment) is expected to account for the maximum amount of demand, followed by off-grid power and industrial demand, and marine bunkering.