According to the International Energy Agency (IEA), India is anticipated to witness a 6% surge in natural gas demand in 2024, attributed to increased consumption in fertiliser units, power generation, and industrial sectors. After a 7% year-on-year decline in 2022, India experienced a 5% rise in primary gas supply in 2023, with the petrochemical, power generation, refinery, and industrial sectors driving growth.
The IEA’s Gas Market Report, released last week, highlighted that the projected 6% increase in India’s natural gas demand in 2024 is supported by higher gas utilization in various industries, including the fertiliser sector, and increased gas burn in the power sector. This growth is facilitated by the development of the national pipeline grid and city gas infrastructure.
In 2023, India’s natural gas demand reached 64 billion cubic meters, with liquefied natural gas (LNG) imports increasing by 7% to 29 billion cubic meters. The nation’s import dependency stood at 44% of the total natural gas consumption, while domestic production witnessed a 6% increase to 35 billion cubic meters, driven by enhanced output from Reliance Industries’ KG-D6 block.
The IEA expects India to boost LNG imports by 7% in 2024, fueled by demand from the power and fertiliser sectors. The report emphasized India’s plans to cease urea imports by 2025, contributing to the increased demand for LNG. Additionally, the IEA noted the significance of the approval of mandatory blending of compressed biogas into the domestic gas supply in November 2023.
On the topic of gas market reforms, the IEA acknowledged India’s progress, including the introduction of a unified pipeline tariff system in April 2023. The Unified Tariff (UFT) policy, implemented by the Petroleum and Natural Gas Regulatory Board (PNGRB), aims to create a consistent and fair tariff structure for natural gas transport across the country. This policy is expected to promote stability, competition, and transparency in gas pricing, aligning with the goal of ‘One Nation One Grid One Tariff.’
Furthermore, the IEA highlighted India’s approval of the National Green Hydrogen Mission in January 2023, setting ambitious targets for green hydrogen production by 2030. The mission includes financial incentive schemes to support domestic manufacturing of electrolysers and green hydrogen production, with an initial outlay of approximately USD 2.4 billion.
