LNG

Indian liquefied natural gas imports rebounded by more than 11 percent in June even at higher prices after last month’s decline as internal gas demand also increased along with domestic production.

LNG imports for the month of June amounted to 1.96 million tonnes, or 29 cargoes, compared with 1.76MT, or 26 cargoes, in June 2023, an increase of 11.3 percent, according to preliminary data from the Ministry of Petroleum and Natural Gas.

LNG imports for the month of May had also come to 1.96MT compared with 2.11MT in May 2023, a decrease of 7.2 percent.

The deliveries for the first three months of the fiscal year so far from April to June edged higher by 0.7 percent to 5.77MT versus 5.73MT in the prior-year period.

Data showed that LNG deliveries in June 2024 cost $1.1 billion which was 10 percent higher than the $1Bln paid in June 2023.

Deliveries of LNG to India’s growing number of regasification terminals come from Qatar, which provides over one-third of volumes, as well as West Africa, the US, Russia Asia-Pacific nations and the spot market.

India’s eighth LNG import terminal, the Chhara facility in the West Coast state of Gujarat, received its commissioning cargo in April 2024.

The Chhara terminal has 5 million tonnes per annum of capacity and has been developed by Hindustan Petroleum Corp.

Domestic gas

The Indian Ministry data showed that India’s domestic natural gas production for the month of June rose by 2.9 percent to 2.993 billion cubic metres versus the 2.910 Bcm reported in June last year.

In the three months of the current fiscal year so far, natural gas output increased by 5.7 percent to 9.056 Bcm, up from 8.564 Bcm in the same period of 2023.

Reliance Industries, the Indian group with significant energy interests, started up a third gas field in the Krishna Godavari Basin KG-D6 block on the East Coast a year ago in a joint venture with BP of the UK. 

India’s production of coal-bed methane (CBM), which in Australia is used to produce LNG, also increased in June to 59.63 Bcm, up from 58.60 Bcm in May 2024 and was at 173.10 Bcm for the first three months of the fiscal year.

The Ministry also gave average capacity utilization rates for seven LNG terminals and with data covering the period from April 2024 to May 2024.

The total capacity of existing terminals has now risen to 52.7 MTPA from the eight facilities. 

However, the Chhara LNG terminal will take several months to appear in the Ministry regasification data book.

Regasification

The largest Indian terminal at Dahej, located north of Mumbai and operated by Petronet LNG, has capacity of 17.5 MTPA and had the highest utilisation rate of 107.2 percent of nameplate capacity in the period, up from 101 percent in May.

At the Hazira facility, operated by Shell India, the utilisation rate increased to 38.3 percent from 28.6 percent in May for 5.2 MTPA of capacity.

The GAIL (India) terminal at Dabhol, south of Mumbai, reported 73.8 percent usage, up from 69.9 percent last month for its 5 MTPA.

The West Coast terminal at Mundra belonging to Gujarat State Petroleum Corp. had regas levels at  34.4 percent up from 33.8 percent in MTPA and its highest ever for 5 MTPA.

At the Kochi facility owned by Petronet in the southwest state of Kerala usage edged lower to 20.6 percent from 20.9 percent last month for 5 MTPA of regas capacity.

The Kamarajar (Ennore) terminal owned by Indian Oil on the East Coast, saw capacity rise to 25.8 percent from 25.6 last month for 5 MTPA.

At the second East Coast terminal, owned by the Adani group and TotalEnergies and located at Dhamra in the state of Odisha, the utilisation rate was 25 percent in the April-May period, down from 26.9 percent for its 5 MTPA.

The Ministry data also showed that the nation had a total of 23,560 kilometres of natural gas pipelines in operation and another 5,630km was currently under construction.

GAIL India had the longest network of 15,916km of pipelines and a distant second place was occupied by the Gujarat State pipelines group and its 2,722km of pipelines.

Consumption

India’s natural gas consumption for June was 5.594 Bcm, an increase of 7.1 percent from 5.224 Bcm in June 2023.

Consumption for the April-to-June period was 16.707 Bcm, up by 3.8 percent compared with the 16.101 Bcm logged in the same period of 2023.

The major Indian consumers of natural gas are the fertilizer industry with around 34 percent of consumption, city-gas 22 percent, power generation 15 percent, refineries 9 percent, petrochemicals 5 percent and others 15 percent.  

LNG importer India said plans were advancing for more exploration and production of domestic energy resources as the nation was preparing to launch a 10th bidding round for oil and gas blocks in August or September.

Two Indian state-backed oil and gas companies have signed an accord to develop the Hatta natural gas field in the Vindhyan basin of Madhya Pradesh in Central India, including building an LNG liquefaction plant to supply the off-grid and transportation fuel markets.

The two companies involved are Oil and Natural Gas Corp. (ONGC), a company owned by India’s Ministry of Petroleum and Natural Gas as is its partner in the venture, Indian Oil Corp. Ltd (IOCL) whose activities are focused on refining petroleum products and producing petrochemicals, though both are already involved in the LNG sector.

ONGC and IOCL have signed a memorandum of understanding to establish a medium-sized LNG plant as part of the Hatta gas field development plan.

“The establishment of the Hatta LNG plant will significantly enhance the Vindhyan Basin's status,”  explained ONGC.

“The plant will utilize cutting-edge technology to produce LNG, a cleaner alternative to traditional fossil fuels, significantly reducing carbon emissions and aligning with India's climate change mitigation goals,” ONGC added.

LNG sector

ONGC has subsidiaries already involved in LNG including Hindustan Petroleum Corp., the owner of India’s newest LNG import facility, the Chhara terminal located in the state of Gujarat and with 5 million tonnes per annum of capacity.

Another unit, ONGC Videsh, is one of three Indian companies who share a 20 percent stake in the TotalEnergies-operated Mozambique LNG project Area 1 licence in the Rovuma Basin of the southeast African nation.  

IOCL is also involved in LNG through its ownership of the LNG import terminal at Kamarajar Port in the East Coast state of Tamil Naidu with 5 MTPA of regasification capacity.

Both ONGC and IOCL are additionally associated and founding companies of Indian’s largest LNG importer, Petronet LNG which has West Coast import terminals at Dahej and Kochi.

ONGC said that the gas discovery at Hatta “represented the culmination of five decades of sustained exploration” efforts.

“ONGC has already submitted its Field Development Plan (FDP) to the Directorate General of Hydrocarbons to monetize its assets in the Hatta area,” stated the company.

The establishment of the Hatta gas field and the LNG plant will enhance the Vindhyan Basin’s status, upgrading it from a Category II to a Category I Basin.

India's sedimentary basins, covering a total area of 3.4 million square kilometres, are divided into three categories.

Category I is for basins with hydrocarbon reserves that are already producing; Category II is for resources with commercial production pending; and Category III are prospective areas where resources may be discovered.

Earnings

The submission of the Hatta gas development plan follows ONGC’s record fiscal-year net profits reported in May 2024 and amounting to 40,526 crore Indian rupees (US$4.85 billion).

However, gross annual revenues fell by over 6 percent to 643,037 crore rupees ($76.94Bln) as prices tumbled.

ONGC’s annual realised natural gas price dropped by 10.8 percent for the year to US$6.55 per million British thermal units from US$7.34 per MMBtu in the previous fiscal year.

The average crude oil price declined by 18.4 percent to US$75.91 a barrel from $93.02 per barrel in the 2022-2023 fiscal year.

Indian liquefied natural gas imports went into reverse last month and fell by more than 7 percent even as prices declined and more regasification infrastructure was put in place, while the need for imports was offset by growth in domestic gas output, including coal-bed methane.

TotalEnergies, the French major with a world-class LNG portfolio of 44 million tonnes per annum, is increasing its natural gas infrastructure investments by paying £450 million ($575M) for a gas-fired power plant in the UK to help mitigate its large holdings of intermittent renewables in the British energy markets.

TotalEnergies has signed an agreement with the North American institutional investor EIG for the acquisition of all the shares of West Burton Energy in the UK Midlands.

West Burton Energy owns and operates the West Burton B gas-fired power plant in the English county of Nottinghamshire.

West Burton B comprises three combined-cycle gas turbines (CCGT) with total output of 1.3 gigawatts.

Commissioned in 2013, it is one of the UK’s most advanced power plants and supplies some 1.8 million homes. A 49 MW battery storage system was added in 2018.

“This acquisition rounds out TotalEnergies’ renewable power generation capacity in the UK with a flexible asset that mitigates intermittency to enable the supply of firm power to customers,” explained the French company.

Capacity needs

“Given the size of the company’s renewable portfolio in the country, which currently stands at 1.1 GW of gross installed capacity and 4.5 GW under development, TotalEnergies assesses its need for gas-based power generation capacity at 700 MW, so the company therefore plans to divest 50 percent of the acquired assets,” TotalEnergies added.

“The deal will also allow TotalEnergies to strengthen its trading capabilities in the country’s electricity and gas markets,” said the company.

TotalEnergies plans to supply the gas-fired power plant from its natural gas production in the UK where it operates 30 percent of the projects.

Earlier in June, TotalEnergies also signed two new LNG medium-term and long-term LNG accords in Asia.

These comprised a sales and purchase agreement (SPA) with Indian Oil Corp. (IOCL) for the delivery to India of up to 800,000 tonnes per annum of LNG for 10 years from 2026.

Korean LNG

The second accord was a heads of agreement with Korea South-East Power for the delivery to South Korea of up to around 500,000 tonnes per annum of LNG for five years from 2027.

The company said that these agreements allow TotalEnergies to secure medium-term outlets for its global LNG supply portfolio.

They also strengthen the company's footprint in Asian markets, where it is particularly committed to supporting its customers with their decarbonization strategies.

Asian liquefied natural gas prices and European cargo values increased for a third week as the Northern Hemisphere winter gas season is set to close with high storage yet to be tested for a second year by adverse weather while crude oil hit a four-month high on negative supply forecasts.

Equinor, the Norwegian major that is now the leading pipeline natural gas supplier to Europe, has just signed a 15-year agreement to deliver LNG cargoes to India with shipments starting in 2026.

Equinor’s growing global LNG portfolio is based on output from the Equinor-operated Hammerfest liquefaction plant on Melkøya island in northern Norway and additional cargoes booked mainly from the US.

Equinor said that the new Indian partner, Deepak Fertilisers and Petrochemicals Corporation Limited (DFPCL), would use the regasified LNG mainly as feedstock for production of ammonia in its newly commissioned plant for manufacturing fertilisers and petrochemicals.

The Equinor-Deepak agreement covers an annual supply of around 650,000 tonnes per annum of LNG for 15 years starting from 2026.

Equinor said that it was delighted with the Deepak agreement as ammonia was a “key building block for the society, being crucial for agriculture and food security” in the Asian nation.

“The ammonia which Deepak will produce from the natural gas will be for domestic use,” added Equinor.

New plant

The Deepak fertilisers facility is located at Taloja in the West Coast state of Maharashtra.

“Deepak’s new ammonia plant has created new gas demand in the growing Indian market,” explained Helge Haugane, Equinor’s Senior Vice President for Gas and Power.

“I am very happy that we have landed this agreement with Deepak Fertilisers. The agreement is another proof of how we use our position in the Atlantic Basin to strengthen our relationship with key players in the growing Indian market,” he added.

“We look forward to developing our relationship with Deepak and to exploring avenues for further collaboration on petrochemicals feedstocks such as propane and ethane and on low-carbon ammonia in the future,” stated Hauge.

Sailesh C. Mehta, Chairman and Managing Director, of DFPCL, said he was delighted with the Norwegian LNG deal.

“The agreement will provide reliable supplies of feedstock which will further strengthen Deepak Fertilisers’ value-chain from gas to ammonia, the key ingredient in fertilisers,” Mehta explained.

“The agreement will help us absorb global volatility as well as enhance overall margins,” he added.

“We also look forward to exploring with Equinor further collaboration on feedstock and carbon footprint reduction initiatives,” stated Mehta.

Indian liquefied natural gas imports increased by 15 percent for the first 10 months of the fiscal year so far and  by 26 percent in January as an additional terminal was available and as prices declined by 27 percent since last year while demand continued to grow.

Indian liquefied natural gas imports surged for another month by just over 12 percent and by more than 14 percent for the fiscal year so far, helped by lower prices and higher demand and despite more competition from increased output from Bay of Bengal domestic gas resources.

Indian liquefied natural gas imports surged for a third straight month by over 18 percent, helped by lower prices and higher domestic natural gas demand and amid more competition from rising local output from offshore the Bay of Bengal.