India Liquified Natural Gas Market
The Government of India plans to raise the share of natural gas in India’s energy mix from 6.5% to 15% within the next few years. With flagging domestic gas production and most reserves still untapped, India increasingly relies on imported LNG to meet expanding demand for both energy and fertilizer feedstock. India is the world’s fourth largest buyer of LNG, after Japan, South Korea and China, and overseas purchases are expected to rise by 10% per annum through the early 2020s.
India currently has four LNG receiving terminals in operation. All are shore-based facilities located on the country’s west coast. India’s plan to double the share of natural gas in its energy mix to 15 percent by 2022 will require a huge increase in imports and the construction of more LNG terminals. The government has plans to build another 11 terminals over the next seven years. As a result, LNG purchases should reach 30mta (million tons per annum) by 2020, a 60% leap on 2016.
Gail Global (USA) LNG LLC, a U.S. affiliate of the Gas Authority of India Limited (GAIL), has signed a 20-year terminal service agreement with Dominion Resources Inc. to book 2.3 million tons per year liquefaction capacity in the Cove Point LNG project. GAIL also has a contract with Cheniere to buy 3.5 million metric tons per annum of LNG for 20 years from Sabine Pass. GAIL (India)’s first LNG consignment was flagged off on March 7, 2018 from Cheniere Sabine Pass LNG terminal and arrived in Dabhol, Maharashtra on March 30, 2018.
Petronet, Gas Authority of India Ltd (GAIL) and the Gujarat State Petroleum Corp (GSPC) have been India’s key LNG players to date, concluding long-term sale and purchase agreements (SPAs) with overseas suppliers. State-owned oil refiners – Indian Oil Corp (IOC), Bharat Petroleum and Hindustan Petroleum – have positioned themselves for greater involvement in the LNG sector, while the range of additional terminal projects currently underway is introducing yet another tranche of newcomers.
The Indian government has cut the import duty on LNG, from 5 to 2.5%, to encourage the use of natural gas, with effect from April 2017. The government allows 100 per cent Foreign Direct Investment (FDI) in upstream and private sector refining projects.
For more information contact U.S. Commercial Service, India
+91 22 2672 4000
Email: office.mumbai@trade.gov