India’s Gas Use Returns to Pre-Covid Level in Smog-Killing Quest
A pedestrian walks past liquefied petroleum gas pipelines in Navi Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

India’s Gas Use Returns to Pre-Covid Level in Smog-Killing Quest

India’s natural gas demand has rebounded to above pre-pandemic levels amid the country’s drive to boost consumption of the cleanest fossil fuel to rid skies of toxic smog.

Demand is rising across several sectors, especially city gas, fertilizers and petrochemicals, with long-haul transport poised to start using LNG in trucks, said E.S. Ranganathan, marketing director of GAIL India Ltd., the nation’s biggest gas utility. Consumption in October was above 2019 levels for the first time since June.

India’s Gas Use Returns to Pre-Covid Level in Smog-Killing Quest

The rebound comes as Prime Minister Narendra Modi seeks to double gas’s share to 15% of the country’s energy mix by 2030. The country, which the World Bank said in 2016 was home to 14 of the 30 most polluted cities on the planet, will see $60 billion in investment in new pipelines and import facilities to increase use of the fuel.

“India’s gas consumption has already surpassed pre-Covid levels,” Ranganathan said in an interview. “All the big industries have actually come back full swing.”

The rebound comes after pandemic lockdowns sapped demand, forcing GAIL to cancel one U.S. cargo and postpone another from Gazprom PJSC, which will now arrive this month, he said.

Meanwhile, rival Indian gas importers -- including Indian Oil Corp. and Gujarat State Petroleum Corp. -- have jumped back into the LNG spot market recently, issuing tenders seeking prompt shipments.

India has aggressively auctioned out areas for city-gas supplies covering 70% of its population while starting LNG fuel stations on highways and industrial areas to convert diesel-guzzling trucks and mining vehicles. Oil refineries alone will boost consumption to 50 million cubic meters a day by 2025 from about 10 million now, Ranganathan said.

Continued growth means that in the year starting April 1, GAIL should be able to consume all of the U.S. LNG it’s contracted to purchase. The company has long-term contracts to buy 5.8 million tons a year, and has had to sell much of that overseas because of a dearth of domestic customers. The company may still swap the cargoes if it saves money on shipping costs, Ranganathan said.

The company also plans to build a new sea barrier at its Dabhol import terminal by August 2022, that will allow shipments year-round, as strong waves force it to shut during summer months now.

©2020 Bloomberg L.P.

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