Demand for LNG set for bull run,say experts, with India leading charge

21/10/2016

Novatek CEO Leonid MikhelsonGlobal demand for liquefied natural gas (LNG) is set to double over the next 15 years, Russian gas producer Novatek’s CEO Leonid Mikhelson told the Eurasian Forum in Verona yesterday, giving extra weight to predictions set out in a report from Citi Research earlier this month that consumption in India – the world’s fourth largest LNG market – would increase by 100% by the end of the decade.
“Experts are predicting that the natural gas market will grow by 30% in the next fifteen years,” Mikhelson told delegates at the forum, “[but] we expect it to double over that period. “[Our optimism ….is supported by midterm projections of skyrocketing gas demand growth in regions where the pipeline infrastructure is poor or underdeveloped.” Yamal and Gydan PeninsulasIn the circumstances, he argued, it was important that Russia continued to develop its LNG projects on the Gydan and Yamal peninsulas within its Arctic territories.
The Indian sub-continent looks likely to be a major driver of that growth in the immediate future, according to the Citi report, which predicts that India’s import capacity will more than double over the next four years from 22 to 45 million tonnes per annum (MTPA) and that demand will have increased from 14 to 16 million metric tonnes (MMT) between 2015 and 2016 and has the potential to hit 30 MMT by FY20. Essar Steel Plant GujaratThe predicted spike in demand could be triggered by a drop in LNG prices bought on, paradoxically, by an expected imminent glut of LNG on the world markets which is expected to spark a revival in India’s gas-based power generation sector.
According to the report, the Essar Group – whose Essar Oil subsidiary was recently sold to the Russian oil and gas giant Rosneft – is planning to restart its two captive gas-based power capacities in Gujarat that hit closed down in 2013. Essar is also expected to need signifiant volumes of LNG to fuel its steel plant in Hazira and feed its refinery at Vadinar.
Gas 4 IndiaOn the consumer front, demand for LNG is forecast to be boosted by the government’s Gas for India campaign that was launched by oil minister Dharmendra Pradhan last month in an effort to educate Indian citizens on the benefits of using gas as their preferred fuel and to raise gas as a proportion of energy consumption from its current 6.5% to 15%: the global average is 24%.