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India's natural gas output to be 60 percent up by 2025: ICRA
New Delhi, July 17 The demand for natural gas
in India will increase to 330 million standard cubic meters per day by 2024-25,
while domestic production will rise by 60 percent to around 150 mscmd, research
and ratings agency ICRA said on Friday.
The increase in supply will come from the likely commencement of Gujarat State
Petroleum Corp's Deen Dayal block and state-run ONGC's KG basin blocks along
with marginal increase in Mukesh Ambani-led Reliance Industries' KG basin
production and other sources, ICRA said in its latest report on Indian gas
utilities.
"Despite high domestic demand-supply deficit, the demand for regasified
liquefied natural gas (RLNG) in the country is critically dependent upon the
prices of liquid fuels and global spot LNG prices," it said.
"The prices of long-term RasGas LNG are expected to be at materially
higher level than liquid fuel prices and spot LNG prices till FY17, thereby
leading to significant pressure on demand and marketing margins of RasGas RLNG
in view of lower prices of liquid fuels and spot LNG," the report said.
The marketers are expected to partially mitigate the risk by taking recourse to
offtake flexibility available under the GSPA and by marketing a higher share of
spot LNG, it added.
Due to competition from liquid fuels and coal, the actual consumption of RLNG
could be lower than demand potential resulting in significant competitive
pressures among LNG terminals, said ICRA senior vice-president K.Ravichandran.
"Even though the government of India has ambitious plans to double the
pipeline capacity to 30,000 km, the constrained gas availability may be a key
hurdle for new pipeline projects, which require large investments," he
said.
Meanwhile a petroleum ministry source here told IANS on Friday that a decision
is expected soon on the premium to be paid on natural gas for all new
discoveries in ultra-deep-water and deep-water areas as well as in high
pressure-high-temperature areas.
In October 2014, the government announced an upward revision to $5.61 per unit
against the industry's demand for at least doubling it to a little over $8 per
unit, as per the Rangarajan Committee recommendations.
As per the mechanism approved in October 2014, the new price of $5.61 per unit
applied for normal categories of gas.
But for all new discoveries in ultra-deep-water areas, deep-water areas and the
high pressure-high-temperature areas, it said that a premium will be given but
did not spell out further details on how it will be calculated.
While shallow-water blocks are at a depth of up to 100-500 metres, deep-water
blocks descend to around 1,000 metres. Those at depths beyond 1,500 metres are
classified as ultra-deep-water blocks.
These are the areas where the Reliance Industries-led consortium has maximum
discoveries.
Reliance Industries will not immediately be able to avail the new price as it
remains locked in an arbitration with the government over alleged shortfall in
production from its Krishna-Godavari basin fields.
The government has announced a new rate, effective April 1, at $4.66 a unit -
lowering it by 8 percent from the earlier $5.61 owing to lower international
prices.