India's Natural Gas Consumption to Rise 60% by 2030

New Delhi, Apr 10 (PTI) India's natural gas consumption is likely to rise by close to 60 per cent by 2030 on the back of rise in usage of the fuel as CNG in automobiles and for cooking and industrial purposes, according to a study by oil regulator PNGRB.

Consumption of natural gas, which is used to produce electricity, make fertilizer or turned into CNG for running automobiles and piped to household kitchens for cooking, is expected to rise from 188 million standard cubic metres per day in 2023-24 to 297 mmscmd by 2030 under 'Good-to-Go' scenario which assumes moderate growth and developments based on current trends and commitments, the study by Petroleum and Natural Gas Regulatory Board (PNGRB) said.

It is projected to rise to 496 mmscmd by 2040 under the same scenario.

Under the 'Good to Best' scenario that considers accelerated progress, favourable policy implementation, and enhanced investments leading to higher-than expected growth, consumption could rise to 365 mmscmd by 2030 and 630 mmscmd by 2040.

In both scenarios, city gas distribution (comprising selling CNG to automobiles and piping the fuel to household kitchens and industries) will bring the anchor demand -- 50 mmscmd out of 110 mmscmd incremental demand by 2030 and 129 mmscmd out of 198 mmscmd incremental demand between 2030 and 2040 under the 'Good to Go' scenario.

The government is aiming to raise the share of natural gas in the country's primary energy basket to 15 per cent by 2030 from the current 6-6.5 per cent. Gas is being considered the bridge fuel as the country transitions away from polluting fossil fuels to clean energy to achieve its net zero emission target by 2070.

The PNGRB has in recent years given out city gas licences for 307 geographical areas (GAs), covering almost all of the country.

"The CGD sector is expected to be the primary growth driver, with consumption projected to grow 2.5 to 3.5 times by 2030 and 6 to 7 times" by 2030 from a base of 37 mmscmd in FY24, it said.


Also, helping will be an upsurge in refinery and petrochemical, especially a renewed focus on petrochemical integration which will provide new growth. The sector is projected to account for 21 mmscmd of incremental consumption by 2030 and another 10 mmscmd by 2040.

Power generation is expected to grow, with moderate rate, driven by peak demand management, enhanced grid reliability, and greater flexibility. The fertiliser sector too is projected to grow moderately, already with a high consumption base.

India meets half of its gas demand through imports. Liquefied natural gas (LNG) imports are projected to grow as demand rises.

"LNG as a long-haul transportation fuel could be a game changer, with the potential to play a pivotal role in replacing diesel. LNG trucking is projected to gain momentum post 2030, with the potential to emulate China's success in reducing diesel dependency," the study said. "India's LNG imports are set to more than double by 2030, driven by increasing demand and relatively slower domestic production growth."

As demand is expected to multiply significantly by 2030 and 2040, dependence on LNG will increase exponentially to bridge the demand-supply gap. With the expected increase in global LNG availability, there is a significant opportunity for long-term supply, leading to structurally lower prices.

"Achieving India's projected natural gas targets for 2030 and 2040 will require a continued commitment from entities towards infrastructure expansion, favourable LNG pricing, and conducive policies," it said without elaborating. "However, geopolitics, policy uncertainty, volatility in gas prices cannot be ignored."

Between 2015-16 (April 2015 to March 2016 fiscal) and 2023-24, natural gas consumption has increased from 131 mmscmd to 188 mmscmd, with 45 per cent growth.

With the power sector being sensitive to input price, gas consumption showed a negative CAGR of 2.2 per cent. City gas distribution (CGD) saw consumption more than doubled, growing at a CAGR of 12 per cent.

Fertiliser sector posted a modest growth with a CAGR of 3.4 per cent while refinery sector saw usage rise by 1.8 per cent CAGR over the period.