MUMBAI: India’s natural gas production fell 13.2% during April-August compared to a 1% fall registered in the corresponding period last fiscal, said Care Ratings in a note.
The cumulative fall in production was primarily a result of restricted or negligible offtake by consumers due to the pandemic and ensuing lockdowns.
While domestic production from onshore fields was around 34%, coal-bed methane (CBM) fields contributed around 2% to total natural gas production during April-August.
“Major part of the output however was from the offshore gas fields which constituted around 64% of the total domestic natural gas production. NOCs* have contributed around 88% of the total domestic output whereas PSC* fields have contributed the remaining around 12%,” Care Ratings said.
Natural gas is used as a fuel and as a feedstock, with demand largely dependent on fertiliser industry (28%), power (23%), city gas distribution entities (16%), refinery (12%) and petrochemicals (8%) industries.
Consumption of natural gas fell 9.5% year-on-year during the period under review. Except in the case of urea production and demand from piped natural gas (PNG) consumers, there has been a fall in power generation, drop in the demand for CNG refueling, fall in refineries throughput and fall in petrochemical production during the aforementioned time period.
However, imports of liquefied natural gas fell 5.5% compared with an increase of 9.1% during April-August of last fiscal.
LNG catered to 53.3% of natural gas consumption during April-August. India imports LNG from Qatar, Nigeria, UAE and Nigeria.
“The overall macros of the natural gas industry is still below its pre-covid levels but on the other hand the situation seems to be improving with the unlocking of the economy. In August’20 the imports of LNG have increased by 5.4% and consumption has decline by 1.8% on a y-o-y basis,” said Care Ratings.
India’s FY21 gross natural gas output, however, estimated to decline 10.6% as exploration and production prospects look bleak with refraining from increase output in the current low price regime.
Domestic gas price is expected to fall further in the second half of this fiscal in line with the trend in global energy markets.
Consumption for the full year is expected to fall 3.2% on account of subdued sales of compressed natural gas, weaker demand from gas-based power plants on account of fall in electricity demand and a cut in refinery throughput by oil refiners.
Demand, however, would be supported by an increase in production of urea.