India Energy Week 2024: Affordable LNG prices key to wider adoption of clean fossil fuel, says Petronet CEO

India’s achievement of the target of increasing natural gas share in total energy mix to 15 per cent by 2030, from 6 per cent at present, was dependent on affordable pricing and synchronisation of infrastructure in the supply chain, said Akshay Kumar Singh, MD & CEO, Petronet LNG.

LNG fuel for transport
Liquefied natural gas being used as clean fossil fuel for transport. Screenshot courtesy: YouTube/Petronet LNG

Petronet LNG, a joint venture company promoted by several Indian public sector undertakings in the oil and gas space, has established India’s first LNG (liquefied natural gas) receiving and regasification terminal in Dahej, Gujarat, and another terminal in Kochi, Kerala.

Singh made his observations while speaking at the leadership panel on ‘Developing LNG markets and infrastructure’ on February 7, the second day of the India Energy Week 2024 in Goa.

Akshay Kumar Singh, MD and CEO of Petronet LNG, and other speakers at a panel discussion at the India Energy Week 2024, on February 7. Photo courtesy: X/@PetronetLNGLtd
Akshay Kumar Singh, MD and CEO of Petronet LNG, and other speakers at a panel discussion at the India Energy Week 2024, on February 7. Photo courtesy: X/@PetronetLNGLtd

The Petronet LNG chief identified pricing as the main impediment in persuading users to switch to cleaner fossil fuel. “Unaffordable prices will force consumers to switch over to other fuels and it’s imperative to calibrate it carefully so that high prices do not end up destroying demand,” he added.

Wide adoption of LNG was required for energy transition, said the CEO, adding that the space for the cleaner fuel’s growth already existed in the Indian economy.

LNG, he said, could replace a large part of crude, 85 per cent of which was imported. India imports around 45 per cent of LNG used in the country.

Additionally, LNG could also easily replace 10-20 per cent of diesel used in transportation, thus increasing the share of cleaner fuel in India’s energy mix, he said.

Singh stressed that while pricing was an area of concern for promoting LNG use widely, the fuel had an advantage: it could be sold in any part of India.

Largescale LNG adoption possible with government support

Singh said that the government’s stated goal was to transition the Indian economy into a gas-based one. The difficult task of largescale LNG adoption was possible with the help of government intervention, he said, particularly in adoption of concessional taxation of the fuel.

Speaking at the same panel, Sukhmal Jain, Director (Marketing) and member of Board of Directors, Bharat Petroleum Corporation Limited (BPCL), said that natural gas adoption was necessary for India to join the league of developed countries.

The BPCL official added that while oil demand growth was projected at 2.5-5 per cent annually, LNG demand growth could be in the 4-5 per cent range.

“Cost, efficiency in supply and taxation have to be aligned for natural gas promotion,” Jain said.

As part of the panel at IEW 2024, Andrew Barry, Chairman, ExxonMobil LNG Market Development and Vice-President, Global LNG Marketing, ExxonMobil Oil & Gas Company, emphasised that LNG was a great partner for renewable energy, which faced intermittency issues due to the cyclical nature of solar, wind, and hydro energy.

Agreeing with fellow panellists, Barry identified the cost of building LNG production and transmission infrastructure as one of the main challenges in the adoption of the clean fuel.