LNG overtakes domestic gas as pricing controls weigh on local producers
NEW DELHI: LNG imports have shot past domestic supplies for the first time in India, creating ground for decontrolling the market even as local producers feel hamstrung by below-cost prices dictated by government formula.
Domestic gas met 47% of demand in 2019-20, while a spurt in import of cheap cargos pushed up the share of LNG to 53% from 31% in 2017. Market is projected to be equally divided between between LNG and domestic gas in the next two years.
“Natural gas is truly becoming a global commodity. For the first time, LNG has ‘outcompeted’ piped supplies in Europe. Gas-on-gas competition is building up globally. Even in India, LNG’s share is more than 50%. Prices are also down. Time is right for decontrol to boost domestic production and promote domestic gas business as upstream is bleeding due to unremunerative prices,” ONGC director (finance) Subhash Kumar said.
Kumar should know, since he has to balance the books as the pricing formula renders ONGC’s multibillion-dollar projects unviable. RIL-BP and OIL too face the same issue. The dwindling economics of existing players is bound to hit efforts to attract upstream investments, industry watchers say.
