In lieu of securing immediate supplies amid surging gas prices, the central government is exploring a plan involving participatory commitments by state-run energy firms in global liquified natural gas (LNG) contracts available after five years, reported Livemint on Tuesday quoting a top government official.
This comes at a time when the prices of LNG have remained high as gas supplies to India have been hit due to the ongoing Russia-Ukraine war. According to Livemint, no-long term global supply contracts will likely be available in the next three years. India currently imports 85 per cent of its oil requirements and 54 per cent of its gas requirements.
Supply cuts from Russia have led European nations to corner a bulk of international contracts to stock up for winter. This has resulted in crowding out of Asian buyers, experts said.
Also Read: Germany won’t back European nations’ call to end Russian tourist visas
“In its rush to get rid of dependence on Russian gas supplies, Europe is crowding out Asian buyers, including India, in the LNG market. Prolonged period of depressed prices had postponed FIDs (final investment decisions), leading to lack of long-term supply options in immediate future,” Debasish Mishra, partner at Deloitte, told Livemint.
“Indian oil PSUs which have a stake in the Mozambique project should be hopeful as Total has revived the project after violent threats, expecting the first supplies to start by 2024. They may be able to time-swap those contracts,” he added.
The concerns over gas supplies also come at a time when India is planning a transition to all clean energy sources, including green hydrogen, which has become an energy security imperative for the nation.
India consumed 163.06 million metric standard cu. m per day (mmscmd) in FY22. India’s gas consumption has been rising as nation is focusing to develop a gas-based economy.
Gas comprises nearly 6.2 per cent of the nation’s primary energy mix, while the global average stands at 24 per cent. The central government is planning to increase the share of gas to 15 per cent by 2030.
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor