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    Domestic natural gas consumption up 6.7% YoY in February

    Synopsis

    Both gas consumption and imports have risen for the second straight month in February in a sign that normalcy was returning to the Indian gas market where industries had cut consumption and switched to more affordable alternative fuels after gas prices rose to record highs last year in the international market.

    natural gas bAgencies
    Domestic natural gas consumption rose 6.7% year-on-year in February as falling international prices helped boost imports.

    Both gas consumption and imports have risen for the second straight month in February in a sign that normalcy was returning to the Indian gas market where industries had cut consumption and switched to more affordable alternative fuels after gas prices rose to record highs last year in the international market.

    Import of liquefied natural gas (LNG) jumped 11% in February over the same month last year, according to the oil ministry data. But for the April-February period, the imports were down 12.8%, reflecting the reduction in the first ten months of the fiscal year. Imports comprised 45% of domestic consumption in the April-February period. The domestic consumption in the April-February period was 5.4% lower than in the previous year.
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    As gas prices skyrocketed last year, much of India’s imports from the spot market disappeared. A significant share of the long-term supplies was also disrupted after Russia’s Gazprom didn’t send cargo following the Ukraine war. Most of India’s long-term supplies come from Qatar at prices linked to crude. With crude now trading around $75, the cost of Qatar supplies has now fallen to around $10-11 per mmBtu.

    Similarly, the Japan Korea Marker (JKM), the Asian spot LNG benchmark, has fallen below $13 per mmBtu from a high of $69 in August. This has brought back some Indian buyers into the spot market.

    Domestic natural gas consumption in February was also boosted by a 2% rise in local production. Most of the local gas is priced according to a government-set formula and is generally cheaper than imports. The domestic formula price, published every April and October, is currently at $8.57 per mmbtu. A government-set price ceiling for gas produced from difficult fields is $12.46. Given the turmoil in the international market, the domestic ceiling became the effective price in most auctions for gas from difficult fields in the country.



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    ( Originally published on Mar 23, 2023 )
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