India’s natural gas consumption will grow by 8.5 per cent in calendar year 2024 from 7 per cent earlier, on account of rising demand from the power and industrial sectors, according to the International Energy Agency (IEA).

“For the full year 2024, India’s natural gas demand is expected to increase by 8.5 per cent, primarily driven by higher gas use in the power sector and in industry. Liquefied Natural Gas (LNG) imports into India are expected to increase by 17 per cent (Y-o-Y) in 2024,” IEA said in its Q3 2024 gas market report.

In the Q2 2024 report, the agency projected gas consumption to grow by 7 per cent annually. In calendar year 2023, consumption stood at 60.12 billion cubic meters (BCM).

The world’s fourth largest importer of liquefied natural gas (LNG) consumed 66.63 BCM natural gas in FY24, compared to 59.97 BCM and 64.16 BCM in FY23 and FY22, respectively.

Rising consumption

According to the Petroleum Planning & Analysis Cell (PPAC), India’s primary gas supply (including net domestic production and LNG imports) rose by an estimated 10 per cent Y-o-Y in the first five months of 2024, extending the recovery that began in 2023 (with a 7 per cent increase for 2023 as a whole), the IEA said.

This increase in supply was supported by an estimated 8 per cent Y-o-Y growth in domestic production, and an estimated 11 per cent surge in LNG imports for the first five months of 2024, it added.

Over the first five months of 2024, the fertiliser sector maintained its dominant share of 28 per cent of Indian demand, followed by city gas (20 per cent), power generation (14 per cent) and refining (9 per cent). Gas demand increased by 21 per cent Y-o-Y over this period.

“In absolute terms, the sectors that contributed most to the increase were refineries, the power sector and city gas distribution,” IEA said.

India’s LNG imports hit a record 3.3 BCM in May 2024, up 23 per cent M-o-M, with equivalent contributions from spot and contract purchases. While India’s LNG imports have largely been met by Qatar (representing 45 per cent of the total LNG imports in the five first months of 2024), the Y-o-Y supply increase originated mainly from Angola and the US.

“In India, continued spot buying during the rest of the year is set to push 2024 imports to within striking distance of the 2020 record high of approximately 37 BCM,” IEA said.

Gas-based power

As with other countries in South Asia, the IEA said India experienced extreme heat and record temperatures in April and May, resulting in increased electricity consumption for cooling, and placing considerable stress on the power supply infrastructure.

Although the proportion of natural gas in the Indian electricity mix is relatively low (2-3 per cent), the country’s gas-fired power generation has increased significantly in recent months.

“According to data from Grid India, gas-fired power generated in April and May was more than double that in the same period last year. In addition to the high demand for cooling during the heatwave, this was also partly due to the invocation of an emergency clause to force the operation of idle gas-fired power plants. The objective of this clause was to avoid power cuts during the 43-day federal elections that ended on May 28(June 1),” IEA added.

Gas-based power plants reported a PLF of 28.7 per cent in May 2024, the highest in the last five years. Before this, such plants had reported a PLF of 28.9 per cent in May 2020.

Gas-based power generation rose by 83 per cent Y-o-Y and 39 per cent M-o-M to 2.8 billion units (BU) last month. Overall power generation rose by 15 per cent Y-o-Y to 167.55 BU.

Generation by gas-based power plants, with a monitored capacity of almost 25 gigawatts (GW), has been scaling records during the summer peak electricity demand month of May 2024.

For instance, the share of gas-based plants almost doubled to 3.1 per cent in India’s overall generation last month, from 1.6 per cent a year ago, Crisil Market Intelligence & Analytics said.

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