Natural gas consumption saw a notable increase in 2023-24, aided by increased domestic output and higher reliance on imported natural gas amid relatively lower international prices. In the FY21, the demand for LNG got hugely impacted by the pandemic but it was largely recovered in FY22. Thereafter, the Ukraine war resulted in international natural gas prices soaring to multi-year highs in FY23, leading to considerable dip in demand as well as supply issues in India’s case. This resulted in lower consumption as well as imports.
In FY24, however, international prices were considerably lower than in FY23, making natural gas competitive again with alternate industrial fuels in India, thereby pushing its consumption and import. This is also in line with the government’s objective of increasing the gas share in the primary energy mix to 15 per cent by 2030 from the current over 6 per cent.
The rationale behind the government’s push for natural gas in the country, even if it leads to higher imports, is rather simple. Natural gas is far less polluting than conventional hydrocarbons like crude oil and coal, and is usually cheaper than oil, for which India depends on imports to meet over 85 per cent of its requirement. As the country moves towards green energy and low-emission or future fuels, natural gas is seen as a key transition fuel in that journey.
