Page 133 - CW E-Magazine (6-8-2024)

Point of View

LNG imports will make up for slack in domestic natural

gas output

Natural gas is widely seen as a transition fuel in
the journey to more sustainable energy, especially
for countries reliant on coal to meet a large portion
of their energy. This includes India, and planners
here have been aiming to have gas play a much
larger role than now. But India is constrained with
poor natural gas resources and reserves, and
despite some recent successes in the Krishna-
Godavari (KG) basin, supply is far below what the
markets need.
For several years now, the gap between de-
mand and supply for natural gas has come to be
met by rising imports of liquefied natural gas (LNG) – a widely traded commodity. Even as the volume of imports are rising year-on-year –
with some aberrations when prices flare up and competing fuels are more attractive – the countries from which LNG is evolving.
While traditional sources in the Middle East still dominate, more distant countries that have recently entered the markets are grabbing
significant market share as well.

Natural gas – preferred as fuel and feedstock
Natural gas has come to be preferred as fuel and feedstock for industries ranging from power and fertilisers, and petrochemicals
to steel. All for good reason. The energy density of natural gas is significantly higher than of furnace oil and diesel – two common fuels
for captive power generation – and slightly more than of LPG and petrol. Natural gas can be more or less completely combusted with
the least amount of air, compared to any other fuel. When fuel oil is burnt, for example, up to 15-20% of excess air is used to ensure
complete combustion – this represents a significant loss of energy through the hot exhaust gases vented through chimneys.

Capital costs of gas-fired power plants are also significantly lower than coal-fired ones and have lower gestation periods between
concept and commissioning. They also have higher operating rates, and lesser downtime.

Importantly, burning natural gas produces less carbon dioxide (CO ) and sulphur dioxide (SO ) per unit of energy, so a switch to
2
2
it (from coal & petroleum) is an important component of strategies to combat global warming – and not just in power production.
Compressed natural gas (CNG) is now increasingly used as transportation fuel – an alternative to petrol and diesel – and its low sulphur
content has contributed in no small measure to urban air quality improvement in many thickly populated urban centres of India, as any
resident of New Delhi will vouch.
Pipelines vs LNG
The main issue with natural gas is that centres of demand and supply do not always coincide, implying that the fuel needs to be
conveyed – at times long distances. This is often done by pipeline, which is capital intensive and energy inefficient – a high-pressure gas
pipeline can transport in a day only about one-fifth of the energy that can be transported through a comparable oil pipeline. An alternate
way to move gas is by liquefying into LNG and shipping it in specialised vessels to consuming centres where it is regassified. Indeed,
the very concept of LNG is a response to the technical and economic problems of running pipelines long distances.

LNG projects are also capital-intensive, encompassing dedicated gas field development & production, liquefaction, transportation,
re-gasification, and transportation & distribution to gas consumers. Most of the world’s LNG supply comes from countries with large
natural gas reserves (Algeria, Australia, Brunei, Indonesia, Libya, Malaysia, Nigeria, Oman, Qatar, Trinidad & Tobago, UAE, and more
recently USA).

LNG projects are also among the most emission-intense assets in the oil and gas sector, and many companies are now actively

Chemical Weekly August 6, 2024 133

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