Liquefied natural gas (LNG) plays a strategic role in the global energy transition, particularly for countries like India, which are seeking to diversify their energy sources while reducing their carbon footprint. According to Akshay Kumar Singh, Managing Director of Petronet LNG Limited, global gas liquefaction capacity could reach around 700 million tonnes per year by 2030, up from 483.1 million tonnes currently. This expansion would meet increased demand for LNG, a resource seen as a viable alternative to liquid fuels.
LNG’s growth potential relies largely on its cost competitiveness compared to liquid fuels. According to Singh, although LNG cannot compete with the costs of coal or renewable energy, it could prove more affordable than some liquid fuels. In India, where more than 80% of liquid fuels are imported, a gradual substitution of these fuels with natural gas seems possible, thus reducing the country’s dependence on crude oil.
A transition supported by investments in infrastructure
India has allocated considerable sums to strengthen its gas infrastructure, including the construction of new LNG import terminals and the expansion of the pipeline network. This initiative aims to facilitate access to natural gas for consumers and optimize its use when prices are competitive. However, the gas market is marked by price volatility which can make LNG unaffordable for some consumers, Singh points out. This fluctuation, accentuated by crises like the COVID-19 pandemic, has pushed some users to return to less expensive liquid fuels.
Singh said that before the health crisis, Indian LNG imports reached nearly 26 million tonnes per year. However, during the pandemic, demand fell to around 20 million tonnes, a phenomenon driven by a shift to more affordable alternatives, such as liquid fuels.
LNG, an asset for India’s climate goals
The use of LNG could also contribute to India’s climate goals, as it is among the least polluting fossil fuels. The country, which aims to achieve carbon neutrality by 2070, considers natural gas a pillar of its decarbonization strategy. “Natural gas will remain vital for at least the next three or four decades,” Singh said, emphasizing that this resource offers a transitional solution to a less carbon-intensive economy.
The Indian government has set an ambitious target of 500 gigawatts of renewable energy by 2030, up from around 200 gigawatts achieved so far. Meanwhile, initiatives to increase forest cover and reduce energy waste are also underway to achieve the country’s emissions reduction targets.
Towards price stability to support LNG demand
In the current context of volatile energy prices, Indian authorities have opted for long-term LNG contracts, thus aiming to stabilize costs and guarantee reliable supply. Singh, however, cautioned that despite these efforts, it is crucial to seize opportunities when the market is favorable, to avoid missing opportunities to procure LNG at favorable prices.
India reiterated its climate commitments at COP 28, pledging to reduce the carbon intensity of its GDP by 45% by 2030 compared to 2005 levels. With this approach, the country seeks to combine its growing energy needs with its sustainable development objectives, while exploiting the potential of LNG as a transition solution.
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