The International Energy Agency released the quarterly edition of the Gas Market Report providing a thorough review of market developments in 2023 and a short-term outlook for 2024. The report stated following a year-on-year decline of 7 percent observed in 2022, India’s primary gas supply rose by 5 percent in 2023.
Jan 28, 2024
India’s natural gas demand, as per the International Energy Agency (IEA), is predicted to rise by 6 percent in 2024 with a rise in consumption in fertilizer units, power generation, and the industrial sector. However, India’s primary gas supply rose by 5 percent in 2023, after a year-on-year decline of 7 percent that was observed in 2022.
IEA’s Gas Market Report states, “Natural gas demand in India is expected to increase mainly supported by higher gas use in industry (including in the fertilizer sector) and stronger gas burn in the power sector amid the development of its national pipeline grid and city gas infrastructure.”
LNG imports are expected to rise by 7 percent fuelled by demand from the power and fertilizer sectors, as the country plans to stop importing urea by 2025. The imports rose to 29 billion cubic meters with import dependency at 44 percent.
Talking about the green hydrogen market, the IEA report stated, “India approved its National Green Hydrogen Mission in January 2023. The mission sets a target for at least 5 Mt/yr of green hydrogen production by 2030, with the potential to reach 10 Mt/yr with the growth of export markets. It proposes two distinct financial incentive schemes to support the domestic manufacturing of electrolyzers, as well as the production of green hydrogen. The initial outlay of the mission is around USD 2.4 billion. In November 2023 India approved mandatory blending of compressed biogas into the domestic gas supply. The mandate will be set at 1 percent of total compressed natural gas and domestic piped natural gas consumption from 2025, and raised gradually to 5 percent from 2028/29.”
India continued to advance gas market reforms in 2023. To boost transparency and remote access, India’s PNGRB introduced the Unified Tariff (UFT) policy in April 2023 to create a single, consistent, and fair tariff structure for natural gas transport across the country. The UFT policy will apply to a network of 21 pipelines, representing around 90 percent of pipelines in operation or under construction. The price of transporting gas consists of two components – a fixed unified tariff and a variable zonal factor.
“The UFT policy aims to create a more stable, competitive and transparent pricing regime, which should benefit both gas supply and demand. It is expected to assist the government in achieving the ‘One Nation One Grid One Tariff’ model,” the report stated.