(EnergyAsia, August 25 2011, Thursday) — India’s consumption of natural gas has taken off thanks in large part to a 50% increase in domestic production in recent year, said US consultant ESAI.
While impediments to supply growth remain, ESAI expects Indian consumption will continue to grow and reach 85 billion cubic metres in the next five years. As natural gas use grows and displaces other fuel, ESAI expects it to eliminate some 100,000 b/d, or about one-third of the country’s naphtha demand.
For supply and consumption to expand more rapidly, the Boston-based firm said India needs to shift to market pricing to encourage domestic output, extend pipeline infrastructure to the southern part of the sub-continent, and build more LNG terminals. Progress is being made in all three areas, but it is unrealistic to expect demand to increase to more than 85 bcm by 2015.
Vivek Mathur, who heads ESAI’s coverage of the petrochemicals market, said:
“The threat to naphtha consumption is in the fertilizer and power industries. Though natural gas will have the greatest impact on coal use, it will also compete with petroleum-based fuels in two sectors. For example, in the last two years there has already been a decline in naphtha use for auxiliary power generation. ESAI estimates 15% of India’s nitrogenous fertiliser production is from naphtha.
“The government is strongly encouraging the complete switch from naphtha to natural gas in this sector. Our analysis indicates that natural gas will displace roughly 75-80,000 b/d of naphtha in the fertiliser sector.” AI 401 Edgewater Place, Suite 640 Wakefield, MA 01880 T: 781.245.2036 F: 781.245.8706 www.esai.com