Gas from new sources will end shortage, say officials

According to government sources, India’s current natural gas supply shortage is likely to be short-lived as current high prices make imports from distant sources such as Norway and the US economically unviable. But such shipments often take longer to arrive, meaning the country could face a shortage during this period, they said.

India’s LPG production increased by 10% after the government decided to prioritize supply to households over industrial users, said an official who requested anonymity. On March 5, the Ministry of Petroleum and Natural Gas (MoPNG) asked all oil refining companies to maximize production and directed that all propane and butane produced, recovered or otherwise available be used for LPG production.

Difficulty turning around quickly

“It is very difficult to make changes to LNG quickly,” the official said. “Besides Qatar, our other options are Norwegian or American gas, and that would take a long time to reach India.”

“We were buying Qatari gas at $6-8 per MMBtu [Metric Million British Thermal Unit]and now the price is $15 per MMBtu,” he explained. “But the economics of this are that when the price even exceeds $10 per MMBtu, gas from Norway and the USA becomes viable despite the long distance.”

Another government official said supplies of both LPG and LNG had been diversified, with cargoes “already starting to arrive”. “It takes time because some geographies are remote, but the materials are arriving,” the official said.

Shipping industry estimates show that it takes around two months for ships to travel to the US or Norway and return to India with a cargo of gas.

“Of course, there will be a lead time between placing orders and receiving deliveries from these countries,” the official said. “Gas will not be a problem in the long term, but there will be some problems in the short term.”

Priority for household

Another official, who wished to remain anonymous, said the government’s top priority is to ensure uninterrupted LPG supply to households “without endangering commercial establishments”.

To allay concerns among restaurateurs over potential shortage of commercial LPG cylinders, the government on Monday constituted a committee of three managing directors of oil marketing companies (OMCs) to “review declarations on LPG supply and try to provide them with some volumes”.

The official said: “We [the committee] We are already in contact with restaurant operators. “All genuine needs will be addressed and assistance will be provided to the extent possible.”

Asked if the committee had been given a timeline, the official said: “We will have to evaluate on a case-by-case basis and will act accordingly.”