India’s LNG imports during May-July 2024 at 4-year high

India’s imports of liquefied natural gas (LNG) rose to a multi-year high during May-July 2024 driven by an unprecedented heat wave coupled with record high temperatures pushing electricity consumption to a new high.

According to energy intelligence firm Vortexa, India’s monthly LNG imports in May, June and July 2024 hit a four year record, averaging 2.57 million tonnes (MT). 

“This was largely driven by record high temperatures that plagued the country since May, resulting in a spike in gas-fired power generation to meet increased cooling demand.

This comes despite Asian spot LNG prices reaching a seven month high of around $12 per million British thermal units (mBtu),” said Vortexa’s LNG Analyst Miko Tan.

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The previous LNG import highs across 2020 occurred in a significantly different market where LNG prices fell to record lows, creating an incentive for coal-to-gas switching in power generation across India, she added in a commentary earlier this week.

However, power demand has softened in July with the start of the monsoon season and easing temperatures, thereby putting downward pressure on gas-fired power generation, Tan said.

Power demand

India’s power demand has been rising at around 7-9 per cent on an annual basis driven by an expanding industrial and commercial base coupled with rising household consumption.

Tan pointed out that record high temperatures led to an uptick in total power generation across the country in May and June 2024. While the increased demand was met largely by hydropower, the share of gas-fired power generation doubled from level in the first quarter.

Capacity utilisation and electricity generation by gas-based power plants, with 23.64 gigawatts (GW) capacity under operation, was the second highest on record during April-June 2024.

In April-June 2024, gas-based plants clocked a capacity utilisation, or plant load factor (PLF), of 25.8 per cent generating 13,338.23 million units (MU) on a provisional basis. This is second only to April-June 2020 when PLFs hit 28.6 per cent producing 14,961.55 MU of electricity.

Higher production by gas-based power plants pushed up gas’ contribution in India’s power generation mix increasing from 2 per cent in June 2023 to 2.8 per cent in June 2024, Crisil Market Intelligence & Analytics said in a report.

However, power demand fell in July with the start of the monsoon season and easing temperatures, thereby putting downward pressure on gas-fired power generation, Tan said.

“While LNG imports remained strong, demand is likely to taper off as the current price point is unattractive to most buyers in the country. GAIL and state-owned refiner IOC did not award their recent tenders seeking cargoes in September and October, as offers were deemed unattractive,” she added.

US replaces Qatar

In June, the US overtook Qatar as India’s largest LNG supplier, importing a monthly record 851,000 tonnes in 12 cargoes. The majority of volumes came from Sabine Pass and Cove Point LNG terminals, with which India’s state-controlled gas distributor GAIL has term contracts totaling 5.8 million tonnes per annum (MTPA), said Tan.

• Also read: US LNG exports to India surge amid price drop and rising regional demand

“Historically, GAIL has optimised their contracted volumes by swapping US term cargoes with supplies in closer proximity. June marks the first time that monthly flows from Sabine Pass and Cove Point combined in MTPA equivalent have reached total contracted volumes, potentially indicating full offtake,” she added.