Domestic natural gas output falls 9.5% in August

Indigenous natural gas production caters about 51% of the country’s requirements, while around 85% of the country’s crude oil is imported.

Domestic natural gas production fell 9.5% year-on-year (y-o-y) to 2,427 million metric standard cubic metre (MMSCM) in July. The 2.6 million tonne (MT) of crude oil produced in the country during the month was also 6% lower than the production in the year-ago period. Indigenous natural gas production caters about 51% of the country’s requirements, while around 85% of the country’s crude oil is imported.

As noted earlier by CARE Ratings, the gross production of domestic natural gas will fall by 10.6% during FY21 as “no company would aggressively want to increase production or get into high-risk projects with such a low gas price”. The current price for gas produced from local fields has been revised to an all-time low of $2.39/mmBtu by the government, which is even below the breakeven point for most fields, the agency noted. Indigenous natural gas production caters about only 51% of the country’s requirements.

Demand for the natural gas in the domestic market is largely dependent on the fertiliser (28%), power (23%), city gas distribution entities (16%), refineries (12%) and petrochemicals (8%) industries. The country aims to increase the share of natural gas in its energy mix to 15% by 2030 from the current level of about 6%.

Due to low demand of petroleum products amid the sporadic lockdowns to contain the coronavirus outspread, crude oil imports have decreased by 23.6% y-o-y during April – July. Consumption of diesel in August was 12% lower than July, while on a y-o-y basis, diesel sales were down 20.7% to 4.9 MT in the month.

Though liquefied petroleum gas (LPG) was the only major product to register growth in the lockdown period, mainly on the back of the government scheme of free cylinder refills for poor households, its sales dipped 5.3% y-o-y in August.

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