Syllabus: GS 3/Economy
In News
- India’s LNG imports from the US reached a record 7.14 billion cubic meters (BCM) in the first 11 months of 2024, marking a 71% year-over-year increase.
About LNG
- Liquefied Natural Gas (LNG) is natural gas cooled to -162°C (-260°F), transforming it into a liquid state for easier storage and transport.
- Composed primarily of methane (90%), LNG is odorless, colorless, non-toxic, and non-corrosive.
India’s LNG Landscape
- As the world’s third-largest energy consumer, India is experiencing the fastest-growing energy demand globally.
- Economic growth is fueling higher energy consumption, making LNG a strategic fuel source.
- India’s LNG infrastructure includes import terminals, pipelines, and distribution networks serving power plants, industries, and city gas systems.
- However, existing infrastructure faces congestion and supply chain inefficiencies, limiting its full potential.
- US Overtakes UAE: In 2023, the US became India’s second-largest LNG supplier, overtaking the UAE, while Qatar remains the top supplier.
- 53.5% Growth in 2024: India’s LNG imports from the US increased by 53.5% in 2024 compared to the entire 2023 calendar year.
- Key Growth Drivers:
- US expansion in liquefaction capacity
- Competitive pricing
- Strategic proximity via the Cape of Good Hope
Why Does India Need LNG?
- Energy Diversification: As India shifts away from coal, LNG plays a key role in the clean energy transition.
- Energy Transition & Net-Zero Goals: India is shifting from coal-based power to LNG to reduce carbon emissions and meet its net-zero target by 2070.
- Industrial Demand: The industrial sector requires cleaner energy, and LNG is a suitable alternative due to its low emissions and efficient combustion.
- Urbanization & City Gas Networks: Growing urban areas are driving the expansion of city gas distribution (CGD) networks.
- Piped Natural Gas (PNG) is a cleaner and safer alternative to traditional cooking fuels, improving urban living standards.
Challenges in India’s LNG Sector
- Infrastructure Deficiencies: India aims to increase natural gas share to 15% of its energy mix by 2030, but LNG infrastructure remains inadequate.
- Congested LNG terminals cause delays and inefficiencies.
- Limited Pipeline Network: Underdeveloped pipelines restrict LNG distribution to remote areas.
- Storage Constraints: India’s limited LNG storage capacity makes it vulnerable to global price fluctuations and supply disruptions.
Government Initiatives to Boost LNG
- Energy Transition Policy: Shift towards cleaner fuels with a goal to increase gas share to 15% by 2030.
- National Gas Grid Expansion: Strengthening the LNG pipeline network to enhance supply efficiency.
- Expansion of City Gas Distribution (CGD): Accelerating urban access to Piped Natural Gas (PNG) and Compressed Natural Gas (CNG).
- Development of New LNG Terminals: Expanding import and storage facilities.
- Priority Gas Allocation: Allocating domestic natural gas to key sectors like CNG for transport and PNG for households.
- Liberalization of Gas Pricing:
- Marketing and pricing freedom for gas from high-pressure, deepwater, and coal seam sources, with a ceiling price mechanism.
- Sustainable Alternative Towards Affordable Transportation (SATAT) Initiative:
- Promotes Bio-CNG as a clean alternative for transportation.
Conclusion & Way Forward
- Investment Incentives: The government must introduce policy measures to encourage private and foreign investment in LNG infrastructure.
- Regulatory Simplification: Streamlining approval processes to accelerate LNG terminal and pipeline expansion.
- Small-Scale LNG Development: Supporting research and deployment of small-scale LNG plants for decentralized energy supply.
- Public-Private Partnerships (PPPs): Collaborative efforts among government, private sector, and financial institutions are essential for building a resilient LNG ecosystem.
Source: BL
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