India’s Delayed LNG Terminals Present Hurdle to Modi’s Gas Goal

(Bloomberg) -- Several of India’s proposed liquefied natural gas import projects are grappling with delays, posing a fresh challenge to Prime Minister Narendra Modi’s plans to boost use of the fuel.

Two floating import terminals missed commissioning targets last year after LNG prices skyrocketed, reducing demand and disrupting import plans, Ayush Agarwal, analyst with S&P Global, said during a media roundtable Thursday. Neither plants are expected to start before 2025, he said.

New Delhi is trying to increase LNG import capacity to lift the share of natural gas in its energy mix to 15% by 2030 from about 6% now. The move is to help lower the dependence on dirtier fossil fuels, such as coal and oil.

Indian consumers are highly price-sensitive as gas competes head-to-head with cheaper alternatives, and LNG purchases fell sharply last year due to the energy crisis. The fertilizer sector, which is heavily subsidized by the government, has been the key driver of India LNG demand growth, Agarwal said.

To make matters worse, three of India’s six operating LNG terminals are running below 20% capacity due to high spot rates and infrastructure challenges, such as the lack of a connecting pipeline network. While Adani Total Gas Ltd. will commission a new terminal on the east coast in the second quarter of this year, the facility may run at lower capacity as the firms contracted to use the plant have not yet secured overseas supplies.

It isn’t immediately clear when the two proposed floating import terminals in India will start. H-Energy Pvt Ltd.’s Jaigarh project doesn’t have a floating terminal booked to import the fuel, and Swan Energy Ltd.’s Jafrabad won’t start up until after 2024 due to the tight fuel market, said Agarwal.

--With assistance from .

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