This news is classified in: Traditional Energy Natural Gas & LNG
Nov 27, 2018
Coal as the primary fuel in both China and India is a reality that will not change anytime soon. But these giants have committed to using more natural gas, a cleaner fuel that is quickly becoming the world's go-to source of energy thanks to its positive environmental attributes. Gas today is just 6-8% of China's and India's energy usage, compared to nearly 30% in the developed countries. India's switch to using more gas to reduce an over reliance on coal has been much slower than China's. Over the past decade, for instance, India's gas demand has been rising at less than 5%, well below China's growth of 15%.
Immense India is the most energy-deprived nation on Earth. The need for all energy will be central to economic goals to lift hundreds of millions of Indians out of poverty. For example, some 300 million Indians have no electricity, with hundreds of millions more lacking adequate access. The average Indian uses just 1/20 of the electricity that the average American does.
Having some 400 million kids under the age of 15, India will become the world's most populated country before 2025.
The future for gas in India is therefore very bright: PM Modi says that India has a plan to “increase the use of natural gas by 2.5 times by the end of next decade."
The main consuming sectors are electricity, city gas distribution, refineries, and petrochemicals.
Cleaner gas will be critical to clearing India's hazy skies. India has some of the worst air pollution in the world, especially particulate matter resulting from over coal use. Despite being so energy-deprived, India also has impressively strong commitments for the Paris climate accord signed in 2015 to cut CO2 emissions. With gas having 50% lower CO2 emissions than coal and 30% less than oil, more gas in India will be required.
Although India wants to double gas production over the next four years, the import percentage of all domestic gas usage (today at 50%) should be expected to increase.
Overall, tightly regulated gas prices have discouraged private sector interest in upstream gas production, particularly more costly offshore where huge deposits sit.
For demand to significantly increase, gas must be reliable and affordable. Low cost energy solutions are especially important for poorer countries like India where residents have just 10% of the incomes that we rich, energy-fulfilled Westerners do.
Building more gas pipelines and infrastructure in such an overwhelmingly coal-based economy like India's is slow but ongoing: " What India can learn from China: Experience of cross border gas pipeline projects." LNG has generally been higher cost, hindering the chance of using more gas over coal. LNG though is normally linked to oil prices, so falling oil prices will help. In any event, partnerships to buy flexible and low cost U.S. LNG will be key for India. Russia and Iran also seek to supply.
India better move quick, or China and others could snatch up too many of the gas buying contracts.
Looking forward, India's gas demand should rise 6-8% per year, which of course is the same rate of real GDP growth.
Within a decade, if the focus can be maintained, gas could soar to being 20% of India's total energy demand.
The impact on the rapidly globalizing natural gas market will be huge: "What If India And China Used Natural Gas And Oil Like The U.S."
