EIA: India’s LNG imports limited by pipeline build

The future growth of India’s liquefied natural gas (LNG) imports will depend on the construction of the connecting pipeline infrastructure.

India has been the world’s fourth-largest importer of liquefied natural gas (LNG) since 2011.

India has been gradually increasing LNG imports as the country’s domestic natural gas production declined and domestic consumption increased, the United States Energy Information Administration noted in its report.

India’s LNG import capacity more than doubled during the past 10 years, and the U.S. EIA expects it to increase by a third in the next three years as new regasification facilities come online. However, 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, EIA said.

In recent years, declining domestic natural gas production and growing consumption have driven the growth in India’s LNG imports.

The industrial sector and city gas distribution network were the main drivers.

India’s domestic production of natural gas, 70 per cent of which is located offshore, has experienced a steady decline. Production dropped from 4.4 billion cubic feet per day (Bcf/d) in 2012 to 2.9 Bcf/d in 2019, limiting the potential for further growth.

India’s LNG imports have grown from 31 per cent of the country’s natural gas supply in 2012 to more than 50 per cent in 2019. India does not import natural gas by pipeline. The country has no plans to build natural gas pipelines.

Currently, natural gas constitutes a relatively small share (6 per cent) of India’s total primary energy consumption. In 2019, the Indian government set a goal to increase the share of natural gas from 6.2 per cent in 2018 to 15 per cent by 2030. EIA expects future growth in consumption primarily in the industrial and power generation sectors.

Earlier this year, India commissioned its sixth LNG import terminal, bringing the total regasification capacity to 5.2 Bcf/d. Four more LNG import terminals currently under construction, expected to come online by 2023, will add 2.5 Bcf/d of LNG import capacity.

Future growth in India’s LNG imports is contingent on connecting LNG regasification terminals on coasts to demand centers further inland via pipeline.

Northwestern India has a highly developed natural gas infrastructure. Both Hazira and Dahej are the most highly utilized terminals in India (at 97 per cent and 110 per cent, respectively).

However, the southern and eastern regions of the country lack pipelines to move natural gas from coastal LNG import terminals to major demand centers further inland.

The lack of pipeline infrastructure near LNG terminals is affecting both existing and planned LNG terminals.

In southwestern India, LNG imports to the existing Kochi terminal are currently limited to local markets. Pipelines expanding to nearby Mangalore will come online in 2020 and Banagalore in 2022. Similarly, new pipelines will connect the existing Ennore LNG terminal to areas beyond nearby Chennai.

In northeastern India, new pipelines coming online within the next three years would connect the Dhamra LNG terminal currently under construction to nearby Kolkata as well as existing pipelines in northwest India, EIA said.

Although India has expanded the number of countries it imports LNG from since 2016, Qatar remains the main LNG supplier to India.

This is due to a relatively short transportation distance: an LNG tanker can leave Qatar and reach India in three days.

India’s LNG imports from the United States hit a total of 0.25 Bcf/d in 2019. New commercial contracts considered between the two countries will push the imports up further.

In 2019, India ranked as the seventh-highest destination for U.S. LNG exports, receiving 5 per cent of the U.S. total last year.