In response to last year’s energy crisis, India is considering building strategic liquefied natural gas (LNG) reserves to avoid potential future shortages or rising prices. According to a senior executive from India’s largest LNG importer, the Indian government is exploring the possibility of creating such reserves.
The finance director of Picronet LNG stated in an interview that the government’s suggestion is to increase LNG storage space to store the fuel when prices are low and use it during times of crisis. The government has faced difficulties ensuring adequate gas supply during crises, as seen in the last energy crisis caused by the conflict between Russia and Ukraine that led to soaring gas prices.
Prime Minister Narendra Modi’s administration aims to more than double India’s share of energy consumption using natural gas. However, the surging energy prices have become a stumbling block for some industries. Therefore, building emergency LNG reserves has become a priority for many countries, similar to the oil industry’s strategic reserves.
Petronet, India’s largest LNG importer, is adding LNG storage tanks to its imported fuel depot and building a floating factory in Odisha state. Although the storage target has not yet been determined, the company is taking proactive measures to ensure adequate LNG supply during a potential crisis.
Last year’s energy crisis led Indian power importers to seek long-term power supply deals to guarantee a more fixed price for their customers. Petronet is currently negotiating with Qatar for a new contract of 7.5 million tonnes of LNG, which expires in 2028, and seeking to extend its import contract to 1 million tonnes.
Although LNG prices have fallen by about 80% since last August, demand for purchases has increased. However, the finance director believes that the price needs to drop to about $6-7/BTU to expedite purchases.
India’s plans to build strategic LNG reserves reflect the government’s efforts to ensure energy security and stability for its people and industries.