India’s natural gas use has grown sharply due to a surge in domestic production and stands to displace naphtha demand by about a third, according to analysts.
Boston-based consultant ESAI said that a 50% increase in gas production in India has boosted the country’s gas consumption. While there are impediments to supply growth, over the next 5 years increased access to gas will allow consumption to rise to a projected 85 billion cu m/year by 2015.ESAI projects that India’s annual gas production will grow to 65 bcm by 2015 from 30 bcm of net output in 2001. Current net output including gas flaring is 50 bcm/year, ESAI estimated.
As the use of gas increases, ESAI expects it to displace about 100,000 b/d of naphtha demand in India, a high energy demand-growth country with barriers to consumption growth.
ESAI said that for supply and consumption to expand more rapidly, India needs to shift to market pricing to encourage domestic output, extend pipeline infrastructure to the southern part of the sub-continent, and build more LNG terminals. Progress is being made in all three areas, but it is unrealistic to expect annual demand to increase to more than 85 bcm by 2015, the consultancy said.
“The threat to naphtha consumption is in the fertilizer and power industries,” according to ESAI’s Vivek Mathur, head of petrochemical-market coverage for ESAI.
Though the increase in gas will have the greatest impact on coal use, it also will compete with petroleum-based fuels in these two markets. In the past two years there has already been a decline in naphtha use for auxiliary power generation, and ESAI estimates that 15% of India’s nitrogenous fertilizer production is from naphtha.
Mathur said that the government is strongly encouraging the complete switch from naphtha to natural gas in the production of fertilizer, and his analysis indicates that natural gas will displace roughly 75,000-80,000 b/d of naphtha for this use.
