India aims to increase LNG imports to 15% by 2030 despite market challenges

ZIM and Shell complete first LNG bunkering under 10-year agreement
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India aims to double its share of gas in its energy mix to 15% by 2030 and become one of the world’s largest importers of liquefied natural gas (LNG). However, the Covid-19 pandemic and resulting drop in demand along with Russia’s invasion of Ukraine have led to a shrinking LNG import market. Despite this, India’s LNG imports saw three consecutive months of growth from March to May 2021, with imports in May reaching 2.7 billion cubic meters. Companies believe that this growth is the beginning of a boom for India’s LNG sector.

Adani Total, a joint venture between French energy major Total and the embattled Indian group, recently opened a new LNG terminal in Dhamra on India’s eastern coast, with a 5 million metric tonne per annum regasification capacity. The terminal is poised to capture gas demand in India’s populous east. Analysts are divided over whether India can meet its ambitious target of increasing its share of gas in its energy mix to 15% by 2030.

Despite Adani facing allegations of fraud and market manipulation from US short seller Hindenburg Research, Total has continued to invest in Adani projects. Total invested over $3 billion in city gas distribution and solar power, but has paused a planned $4 billion investment in a green hydrogen venture following Hindenburg’s allegations. “The Dhamra terminal reflects TotalEnergies’ ambition to support India’s energy transition and supply security”, Total said in April.

LNG has remained an expensive fuel source with volatile prices. LNG headed for India is priced just below $10/mmbtu, higher than domestically produced gas. Analysts suggest that the fertiliser sector could start using more LNG to make products such as urea or ammonia, accounting for a third of gas demand, but an overnight jump in LNG demand from the fertiliser sector is unlikely.

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