India's LNG Ambitions Stymied by Infrastructure Deficiencies
India's aspiration to curb its reliance on coal by embracing liquefied natural gas (LNG) faces challenges due to a shortfall in infrastructure.
Underutilized LNG Terminal Highlights Deficiencies
Despite its inception over a decade ago, Petronet LNG Ltd.'s Kochi terminal remains underutilized due to insufficient pipelines for fuel distribution. This scenario reflects a broader infrastructure gap hampering gas adoption across India.
Causes of Infrastructure Shortfalls
Various factors contribute to India's infrastructure shortfalls, including:
* Uncertain investment returns
* Local resistance
* High gas prices
* Unfavorable tax regime
These hurdles have hindered Prime Minister Narendra Modi's push for gas consumption and investments by producers like Shell Plc and TotalEnergies SE.
Pipeline Gaps and Missed Targets
The country's pipeline network exhibits significant gaps, limiting its ability to transport the required gas volumes. A regulatory panel is evaluating policies to encourage pipeline investments.
Ambitious Gas Target Faces Challenges
India aims to double its gas share in the energy mix to 15% by 2030, but the share has remained stagnant below half that level. Achieving the target requires tripling gas consumption and significant investments in new pipelines, import terminals, and last-mile connections.
Land Acquisition and Safety Concerns
Land acquisition issues and safety concerns impede pipeline development. Delays in land access and protracted negotiations with landowners have stalled projects.
LNG Import Concerns
India's LNG import facilities operate below capacity, with only Dahej running at full potential. The low utilization reflects the infrastructure constraints and the challenges faced by state-run Gail India Ltd. in gas supply and transport.
Outlook for LNG Imports
LNG imports have struggled to surpass the 2020 peak, with imports declining in January 2023 due to surging spot prices and the availability of cheaper alternatives like oil products. India's focus on energy self-reliance may also limit demand for imported gas.