Login

Lost your password?
Don't have an account? Sign Up

Centre planning to import CNG in place of LNG to meet domestic demand

Share This News Story:

NEW DELHI : India is considering importing compressed natural gas (CNG) in place of liquefied natural gas (LNG) to meet the incremental domestic demand at a lower cost at a time high prices have cut local LNG consumption, according to people with direct knowledge of the matter.

The oil ministry has asked GAIL and Petronet LNG to explore supply sources and shippers for importing CNG, they said. CNG is natural gas compressed under high pressure while LNG is gas supercooled to liquid, both conversions undertaken to reduce the volume of gas for transport. CNG, however, has 2.4 times less energy density per unit of volume than LNG and therefore is uneconomical to transport from far-off places, such as from the US to India.

But the economics is favourable if the exporter is located within 1,500 nautical miles, a range that would cover gas-producing countries in the Gulf region, the person said.

CNG has a lower cost of production and storage compared to LNG, which requires sophisticated cooling plants and cryogenic tanks. CNG can be directly injected from the ship into the pipeline for use, but LNG must be regasified at import terminals before a transfer to pipelines. The combined cost of liquefaction and regasification is about $4 per mmBtu, something CNG importers can save, the people cited above said. The current cost of LNG in the Asian spot market is about $22 per mmBtu.

It takes about three years to build a liquefaction plant or regasification terminal, a key reason LNG supply hasn’t been able to respond quickly to increased global demand in the past several months, resulting in record-high prices. CNG export or import facilities do not require such lead time. But the shipping of CNG is less popular and so fewer CNG carriers are available in the market. Indian companies are now trying to figure out if they can quickly tap into some existing supply chains or help build one to source CNG.

India has the ambition to raise the share of natural gas in its energy mix to 15% by 2030 from the current 6.7%. Half of the domestic gas consumption comes from imports that have fallen due to high LNG prices.

Share This News Story: