India steps on gas as coal use for power generation slows

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CHENNAI/NEW DELHI Indian power vegetation used probably the most gas in a minimum of 3-1/2 years within the June quarter, as operators alongside the west coast snapped up low cost liquefied pure gas (LNG) imports which have develop into aggressive towards coal, authorities information confirmed.

Power producers say the development is prone to proceed till a minimum of September, and maybe past, offering a vibrant spot for LNG sellers as demand elsewhere falls as a consequence of a worldwide financial slowdown sparked by the coronavirus pandemic.

Gas consumption by power vegetation rose 11.7% to 104.83 million normal cubic metres per day (mmscmd) within the three months to end-June from the identical interval final 12 months, information from the Central Electricity Authority (CEA) confirmed.

Imports accounted for 37.4% of general gas consumption by power vegetation, up from 35% a 12 months in the past.

Lower spot costs are making pure gas “lucrative” for power vegetation, in line with India’s largest gas importer Petronet LNG Ltd , which not too long ago cancelled a young to purchase long-term LNG. [nL3N2EU18I]

“I do believe there is some coal switching taking place and imported coal-based power plants may not be competitive vis a vis spot LNG (consuming power plants),” Vivek Mittal, normal supervisor for advertising and marketing at Petronet, mentioned on a current convention name.

India’s imports of spot gas greater than doubled within the June quarter from a 12 months in the past to the very best in a minimum of 14 quarters, whereas purchases below long-term contracts slumped by over a 3rd to the bottom in the identical interval, a Reuters evaluation of the obtainable information confirmed.

COAL SALES PLUNGE

The elevated use of gas comes as India’s general electrical energy demand is anticipated to fall this 12 months for the primary time in a long time, with a probable fall in nationwide coal-fired generation.

Sales at state-run Coal India, which sells most of its output to power firms, fell to the bottom degree in practically 4 years within the second quarter. Weaker gross sales might proceed by way of end-September as a result of annual monsoon, when coal demand and output sometimes falls and transportation is troublesome.

Imports of coal by power vegetation additionally fell to the bottom degree through the June quarter in a minimum of seven years. [nL4N2E83P9]

Still, coal stays India’s dominant gasoline for power manufacturing. More than half of India’s gas-fired vegetation are additionally shut as a result of they aren’t economically viable, which power producers attribute to excessive taxes and transportation prices.

Gas consumption elevated primarily as a consequence of larger consumption by firms on India’s west coast, significantly the state of Gujarat, residence to among the nation’s greatest LNG import vegetation.

The state, which is near producer nations such as Qatar, additionally has a greater gas transportation community, and is comparatively removed from coal mines, making gas-fired power manufacturing comparatively cheaper, power producers say.

Gujarat-based personal corporations such as Torrent Power and utilities run by the state authorities accounted for practically all LNG imports by power firms, in line with the CEA.

“We expect global LNG prices to be at current levels for the next two years due to low global demand and gas consumption by power plants in Gujarat to increase,” an government from a big Indian power producer mentioned.

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“But only plants on the west coast will be able to make use of the price competitiveness with coal.”

Disclaimer: This publish has been auto-published from an company feed with none modifications to the textual content and has not been reviewed by an editor


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