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To transport large quantities in the absence of pipelines, the gas needs to be liquefied and cooled down to - 160°C (which reduces the volume to 1/600th of the original) and transported in cryogenic ships or trucks.
An LNG project has been described as a chain of investments whose ultimate success depends on the integration of four (possibly five) elements. They are field development, a possible pipeline to deliver the natural gas to a coastal location, a liquefaction plant, cryogenic tankers, and a receipt and re-gasification terminal in the market country.
This special transportation need makes LNG expensive, and hence not usable in Indian power plants. This along with a lack of national LNG pipelines means that LNG consumption in India as a fraction of total energy consumption is 1/3rd of the world average. Also, there is currently likely to be an oversupply in LNG globally, which will see prices come down. This represents a lot of scope for growth of LNG in India.
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Current Scenario |
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The chief importers of LNG are US, Japan, South Korea and Portugal. India imports its LNG through 2 terminals at Dahej and Hazira in Gujarat.
Within the offshore vessels, demand is more for new generation vessels with high capacity and the ability to multi-task. An analysis of the orderbook shows that a vessel like AHTS which can do anchor handling/towing and supply, is preferred over an AHT, which can only do anchor handling/towing. Similarly, vessels with high engine power (more than 8000BHP), winch pull (> 250 tonnes) and dynamic positioning systems are now preferred. |
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In July 2008, Shell invited bids to build its LNG FPSO with a capacity of 3.5 to 4 million tonnes per annum to be deployed at the prelude fields to the northwest of Australia. Chevron is looking to outsource the building of their LNG facility in Wheatstone, Australia. Currently, bids are invited for front end engineering and design of the 2 big platforms and subsea pipelines. |
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Major oil companies are eyeing Iraq, Egypt and the region to the north west of Australia as potential rich sources of LNG. This, along with the setting up of new LNG terminal in India, like the one near Dabhol power plant is likely to increase the LNG trading activity in the Indian Ocean.
For India, the route of interest is from the Middle-east gas fields to China, a major consumer. Besides, consumption of LNG in India is also expected to grow. In view of the potential increase in gaseous fuel consumption, various pipeline projects are coming up in India as seen in the following figure. Currently India has 2 LNG Terminals (+ 5 planned) and 15 Gas Carriers belonging to SCI, Great Eastern and Varun Shipping. So far, this has not been sufficient to meet India’s LNG demand. However, recently the KG basin gas production has been started by Reliance, and this could narrow the supply-demand gap. |
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India NG Market |
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Natural gas currently accounts for around 8% of the total energy mix in India as against the global average of 24%. The un-met demand for natural gas is estimated to increase from about 113 MMSCMD (FY 2007-08) to 396 MMSCMD by the year 2022. This is excluding the north eastern region of India, which is not yet connected to the gas supply network. |
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Before the discovery of the KG basin, India’s domestic supply was too small, and even the existing reserves would be depleted to 50% by 2015. However, with the discovery of the NG reserves in KG Basin, the demand for LNG is likely to go down. Also, big power plants prefer coal as the fuel. Even though coal is more polluting and inefficient than NG, it is cheaper and India has large reserves. In addition, the development of the coal bed methane is a new threat to LNG market in India.
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Future Outlook |
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