Indian Gas consumption growth in FY2023 to be marginal due to high prices
Indian gas consumption in the year to March 31, 2023 (FY2023) is likely to be stable or notch up marginal growth due to high prices, Prashant Vasisht, vice president and co-head – corporate ratings, ICRA told NGW. “Consumption of gas by some sectors such as power would be adversely impacted. We estimate stable or marginal growth in consumption for FY2023 vis-a-vis FY2022,” he said. “For some sectors like urea fertilisers the costs are passed on to the government of India in the form of higher subsidies.” According to government data, in FY2022, Indian gas consumption increased by over 5% year/year to 63.9bn m3. The cumulative consumption in the April-September period, the first half of FY2023, was 31.48bn m3. Indian government increased the regulated wholesale prices of locally produced natural gas by 40% with effect from October 1. For October 1, 2022 to March 31, 2023 period, the price paid to most domestic natural gas producers will be $8.57/mn Btu, up from $6.1/mn Btu in the April 1 to September 30, 2022 period. The government also notified an increase in the natural gas prices from difficult-to-exploit fields such as deep water, ultra-deepwater and high pressure-high temperature to $12.46/mn Btu from $9.92/mn Btu. The prices of locally-produced gas are set every six months through a formula linked to global rates, which have risen sharply in the last six months. India’s LNG imports have also been impacted due to high global prices. The cumulative imports during the April-September period, the first six months of FY2023, were 11mn metric tons or 14.7bn m3, down 11.3% yr/yr. The import cost during April-September was $6.6bn, up from $5.8bn in the same period last year. ICRA expects the LNG import volumes for FY2023 to be between 22 and 23mn mt. Price advantage of CNG over liquid fuel moderates The demand for CNG vehicles in India was strong till the early part of the year as the prices of petrol and diesel were continuously rising. The recent hike in domestic gas prices has eroded the price advantage that CNG enjoyed to some extent. “Though the economics for use of CNG would still be favourable as compared to liquid fuels, however, the competitive advantage has moderated, which may deter conversion to CNG and may have an adverse impact on new [city gas distribution (CGD)] areas coming online thereby impacting their returns. We estimate a growth in CGD gas volumes of 8-10% in FY2023 vis-a-vis FY2022,” Vasisht said. According to a report published by Economic Times on September 30, the Indian automobile industry has trimmed the estimate of the number of CNG vehicle that would be sold in FY2023. The industry expects to sell 500,000-550,000 units in the year ending March 2023, about 25-30% lower compared with the estimate of 700,000-750,000 at the beginning of the fiscal year. This would still be much higher than 2,61,000 units of CNG passenger vehicles sold in India in FY2022. Indian gas production growth a bright spot After years of stagnant output, India’s domestic gas production in FY2022 jumped almost 20% year/year to 33.13bn m3. The trend has continued in the current fiscal as well. In the first six months of FY2023, the cumulative production of natural gas was 17.18bn m3, up 1.7% year/year. New gas projects are expected to come online in the near future. Reliance and BP will bring the MJ gas project off India’s east coast by end of 2022, Mumbai-based Reliance said mid-October. MJ gas field lies in Indian upstream block KG D6 in water depths of 700m to 1,100m. It is the third of three gas projects in KG D6’s 350bn Indian rupee ($5bn) integrated development programme. The first two projects, R-Series and the Satellite clusters, received FIDs in 2017 and 2018 respectively. Reliance and BP achieved first gas at R-Series in late 2020, and brought the Satellite cluster on stream in April 2021. By 2023, the three projects are anticipated to produce over 30mn m3/day of gas, according to Reliance.
India Warns Producers Against Higher Oil Prices
India’s oil minister said higher crude prices would only serve to accelerate the transition to cleaner energy and worsen any global recession. “If you raise the price from here, the only response is that the recession will be deeper and prolonged,” Hardeep Singh Puri said to Bloomberg TV at the Adipec energy conference in Abu Dhabi. “It’s in their interest not to let it go beyond” current levels, he said, referring to producers. US companies’ investment in new energy supply is “just not enough,” Amos Hochstein, President Joe Biden’s special envoy for energy, said. They spoke after Claudio Descalzi, chief executive officer of Eni, warned that Europe will have to rely on America to make up for a loss of oil supplies from Russia next year. The world’s biggest oil and gas companies and energy ministers from Saudi Arabia, the United Arab Emirates and India are meeting in Abu Dhabi this week. Running from Oct. 31 to Nov. 3, Adipec comes in the wake of OPEC+ opting to cut crude production, a move that led to fierce criticism from the US. Oil prices have climbed in the past two weeks, with Brent trading around $94 a barrel.
ADNOC and GAIL of India to explore LNG supply and decarbonization opportunities
Abu Dhabi National Oil Company (ADNOC) and GAIL (India) Limited signed a Memorandum of Understanding, today, to explore collaboration opportunities in liquefied natural gas (LNG) supply and decarbonisation, including short and long term LNG sales agreements. The agreement also includes potential optimization of LNG trading activities, the review of joint equity investments in renewables and the monitoring of greenhouse gasses for LNG cargoes, to support low carbon LNG supplies. The agreement was exchanged between Sandeep Kumar Gupta, Chairman and Managing Director, GAIL (India) Ltd and Fatema Al Nuaimi, CEO ADNOC LNG in the presence of His Excellency Dr. Sultan Ahmed Al Jaber, Minister of Industry and Advanced Technology, UAE Special Envoy for Climate Change, and ADNOC Managing Director and Group CEO, and H.E. Shri Hardeep Singh Puri, India’s Minister of Petroleum and Natural Gas and Minister of Housing and Urban Affairs at Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC). H.E. Dr. Al Jaber said: “India is a strategic partner of the UAE and we have a strong and longstanding bilateral relationship. Through this important new agreement, ADNOC and GAIL will seek opportunities to broaden our commercial partnership, with a particular focus on lower carbon energy supplies, in this case LNG, and joint opportunities for collaboration in new projects, decarbonization efforts and renewable energy.” H.E. Shri Hardeep Singh Puri said “India and the UAE enjoy strong bonds of friendship since historical times and this relationship is being further cemented through such partnerships. This MOU opens up opportunities for both GAIL and ADNOC in the energy sector which in turn helps to boost the trade and commerce relations between the two nations.”