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With the continued decline in domestic gas output, Indias dependence on the twice more expensive imported gas should have increased. But, imports have not taken off as expected, say industry observers.
The reasons for this include inadequate pipeline and import facilities, while lack of clarity on gas pricing front has been blamed for restricting local output.
Also, customers like those in the power sector are not willing to buy expensive fuel, as there were few takers for electricity generated at high costs.
The net result there is now greater pressure on domestic explorers to produce more.
Since the past two years now, domestic gas output has been falling, mainly due to unexpected production declines in the countrys largest gasfields in the East Coast operated by Reliance Industries Ltd. According to the data released by the Petroleum & Natural Gas Ministry, during the fiscal 2012-13, natural gas output fell by 14.5 per cent year-on-year at 40.677 billion cubic metres, as output from offshore fields, including RILs D6, fell 17.3 per cent against last year.
The D6 block is at present producing about 15 mmscmd, after hitting a peak of 60 mmscmd in end-2009. But, this output is unlikely to increase before 2015-16, when Reliance and its partners in the block BP and Niko Resources are targeting to bring the satellite discoveries on stream.
Liquefied natural gas (LNG) or imported gas has become an important part of the countrys energy mix, but its high price has kept demand suppressed, say those tracking the sector.
Spot LNG prices range between $18-19/mmBtu, and the long-term contract gas at around $11/mmBtu, while domestically produced gas is priced between $4.2-$5.7/mmBtu. The domestic producers are now seeking a market price for indigenous gas.
Gas consumption in the country during 2012-13 was 160 mmscmd, of which 50 mmscmd was imported. Some of the key importers during the year were Petronet LNG (about 34 mmscmd), GAIL (4 mmscmd), Reliance Industries (10 mmscmd), and GSPC (4-5 mmscmd).
Companies have invested in increasing the country's LNG re-gasification capacity in recent years to meet rising demand, but a clearer picture on the policy front is needed, say observers.
Crude oil dips
Meanwhile, crude oil production in 2012-13 has dropped marginally by 0.6 per cent year-on-year at 37.86 million tonne.
To meet the growing refining demand and no significant increase in indigenous output, domestic refiners were compelled to import more crude oil during the year. The refiners (18 public sector and two private sector) imported 184.453 million tonne of oil (171.729 million tonne in 2011-12). Reliance Industries does not share planned targets and production data for its export-oriented refinery in Jamnagar.
According to Petroleum Planning & Analysis Cell (PPAC) data, the petroleum product demand during the year was up at 155 million tonne from 148.132 million tonne in the previous year. To cater to the growing petroleum product demand, the refiners turned 6.9 per cent more crude oil into fuel during the year under review against last year.
According to PPAC, the consumption estimates represent market demand and are aggregate of sales by oil companies in the domestic market and consumption through direct imports by private parties.
While the data for company sales were actual, that of private direct imports are estimated, it said.
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