As power firms and refiners transition to alternate fuels, the demand for natural gas declines

27 Jul 2022 , 08:45 AM

India is consuming less natural gas as refineries, power plants, and petrochemical facilities use less of the expensive fuel.

According to figures from the oil ministry, domestic consumption decreased by 2.5% year over year in the first quarter of FY23 while gas imports decreased by 10%. Over the year, consumption dropped 4% in June.

Rising domestic output, which increased by 5% over the year during April—June, partially offset the fall in imports. Reduced capacity utilization at gas import terminals is another effect of this.

According to an industry executive, the transfer by industries to alternative fuels is the main cause of the reduction in demand. He stated that while generators have been less likely to utilize pricey gas to generate power, refiners have turned to liquid fuels.

Gas consumption by refiners decreased by 29%, and the need for imported gas was reduced by HALF. However, during April and May, the amount of domestic gas consumed at refineries more than doubled. The margin for refining is greatly impacted by fuel costs.

In the April to June quarter, domestic and imported gas prices were significantly higher than they were during the same time last year.