India’s domestic natural gas output falls by 9.5 per cent: CARE Ratings

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India’s domestic natural gas production fell by 9.5 per cent year-on-year (y-o-y) to 2,427 million metric standard cubic metre (MMSCM) in July this year. The 2.6 million tonnes (MT) of crude oil produced in the country during the month was also 6 per cent lower than the production in the year-ago period. Indigenous natural gas production caters about 51 per cent of the country’s requirements, while around 85 per cent of the country’s crude oil is imported.

CARE Ratings noted that the gross production of domestic natural gas will fall by 10.6 per cent during FY21 as “no company would aggressively want to increase production or get into high-risk projects with such a low gas price”. The current price for gas produced from local fields has been revised to an all-time low of $2.39/mmBtu by the government, which is even below the breakeven point for most fields, the agency noted. Indigenous natural gas production caters about only 51 per cent of the country’s requirements.

cylinder, fertiliser, refineries, petrochemicals, Demand for the natural gas in the domestic market is largely dependent on the fertiliser (28 per cent), power (23 per cent), city gas distribution entities (16 per cent), refineries (12 per cent) and petrochemicals (8 per cent) industries. The country aims to increase the share of natural gas in its energy mix to 15 per cent by 2030 from the current level of about 6 per cent.

Due to low demand of petroleum products amid the sporadic lockdowns to contain the coronavirus outspread, crude oil imports have decreased by 23.6 per cent y-o-y during April – July. Consumption of diesel in August was 12 per cent lower than July, while on a y-o-y basis, diesel sales were down 20.7 per cent to 4.9 MT in the month.

Though liquefied petroleum gas (LPG) was the only major product to register growth in the lockdown period, mainly on the back of the government scheme of free cylinder refills for poor households, its sales dipped 5.3 per cent y-o-y in August.

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