India steps on gas as the use of coal for power generation

CHENNAI (Natural Energy News): Indian power plants used the most gas in at least 3-1 / 2 years in the quarter of June month, as operators along the West Coast imported inexpensive liquefied natural gas (LNG) that became competitive, as per coal government data showed.

Electricity producers say the trend is likely to continue until at least September, and perhaps beyond, providing a bright spot for LNG sellers as demand falls elsewhere, triggered by the coronavirus epidemic that caused the global economic downturn.

Data from the Central Electricity Authority (CEA) shows that gas consumption by power plants increased by 11.7% to 104.83 million standard cubic meters per day (mmscmd).

37.4% of total gas consumption was imported by power plants, up from 35% a year earlier.

According to Petronet LNG Limited, India's largest gas importer, lower spot prices for power plants are making natural gas "attractive", having recently cancelled a tender to buy long-term LNG.

Vivek Mittal, general manager for marketing at Petronet, said at a recent conference, "I believe coal is interchangeable and imported coal-based power plants cannot be competitive spots. LNG (power plants) Consumed).".

Spot gas imports in India more than doubled in the June quarter to at least 14 quarters from a year earlier, while purchases under long-term contracts fell by more than a third in the same period, a Reuters analysis. Available data have shown.

Coal sale scheme

The increased use of gas comes with the possibility of declining national coal-based production for the first time in decades due to India's overall electricity demand.

Sales of Coal India, which sold most of its production to power generation companies, fell to the lowest level in nearly four years in the second quarter. Weak sales due to the annual monsoon may continue until the end of September when coal demand and production generally fall and transportation is difficult.

Coal imports by power plants also fell to the lowest level during the June quarter in at least seven years.

Nevertheless, coal remains India's major fuel for electricity generation. More than half of India's gas-based plants are also closed because they are not economically viable, which attributes power producers to high taxes and transportation costs.

Gas consumption has increased due to over-consumption by companies at the country's largest LNG import plants on the west coast of India, particularly the state of Gujarat.

Power producers say the state, which is close to producing countries like Qatar, also has a better gas transportation network and is relatively far from coal mines.

According to the CEA, Gujarat-based private firms such as Torrent Power and state-run utilities are responsible for almost all LNG imports by power companies.

An executive of a large Indian power producer said, "We expect global LNG prices to remain at current levels for the next two years as lower global demand and increased gas consumption by power plants in Gujarat."

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