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.
“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.