INTERVIEW: India's 2024 gas consumption to rise 5%-6%, says Adani Total Gas CEO

MSME, LTM offer huge untapped potential

Company cuts reliance on spot amid volatile prices

Pursuing CGD network expansion, green energy moves

India's natural gas consumption in 2024 will likely grow 5%-6% corresponding to an estimated economic growth of 6%-7%, with its share boosted in future if the country taps two "hidden jewels" -- Micro, Small and Medium Enterprises (MSMEs) and LNG for transport and mining (LTM) -- Adani Total Gas Executive Director & CEO Suresh P Manglani said.

An additional demand of around 100-120 MMSCMD can fructify if a supportive eco-system is provided to the MSMEs to switch to natural gas, Manglani told S&P Global Commodity Insights in an interview during the India Energy Week 2024 in Goa.

India offers productivity-linked incentive to manufacturing because it wants to be a manufacturing hub, Manglani said

"Our view is that if India brings in some sort of consumption linked incentive or CLI -- like a direct benefit transfer for the MSMEs -- the country can make a faster progression toward natural gas," he said.

This step will boost trade for CGD companies, which in turn will have a ripple effect on both pipeline utilization and terminal utilization, he opined.

When it comes to transportation, there is growing industry consensus that diesel must be phased out in a calibrated way for long haul vehicles such as trucks and buses, Manglani said.

"Presently, India uses about 80 million mt/year of diesel with [around] half of that being directed towards LTM. By 2030, we are expecting this 80 million mt/year figure to grow to 120-130 million mt/year because India is a burgeoning economy," he said.

"Even if we achieve a 25%-30% switch from diesel to LNG, we will see a major surge in LNG's demand for transport and CGD is well positioned to capture that market," he added.

Meanwhile, from the infrastructure point of view, India is passing through an "exciting phase", Manglani said.

Significant increase in domestic gas production, improved pipeline connectivity, increasing RLNG capacity with about 20 million mt/year of new capacity on the anvil in the coming years, and multiple CGD licensing rounds in the past few years bode well for increased natural gas consumption, he said.

Reshaping strategy

While LNG prices will always retain some element of volatility, triggered by events like the Russia-Ukraine war or the Red Sea attacks, prices have mostly stabilized presently, Manglani said. Because of increasing domestic gas production and the strong CGD distribution network, I think India is well placed, he said.

Platts, part of S&P Global, assessed March JKM up 41.2 cents/MMBtu on the day at $8.925/MMBtu Feb. 15, while on the same day it assessed the LNG West India Marker at $8.725/MMBtu, at a discount of 20 cents/MMBtu to the March JKM assessment.

"We expect a supply glut of LNG from 2025-26 onward. That is also a favorable factor for India because by that time infrastructure build-up will take place and we will be able to receive this LNG from all terminals in India," Manglani said.

As far as the company was concerned, it has reshaped its strategy to trim its reliance on spot contracts, he said. "Earlier it used to be [about] 20% of the total portfolio but now it is much less," he noted.

"Moreover, we also calibrate on multiple tenures, multiple indices -- we could have JKM, HH, Brent and/or a hybrid system. This helps because if one index is more volatile, we can still source a similar amount of gas because we have a mixed portfolio," Manglani said.

The company is also forging ahead with various growth strategies including green energy pursuits.

For the nine-month period ended Dec. 31, 2023, the company's CNG sales volumes rose 21% year on year to reach 408 MMSCM, while its PNG volumes grew 1% on the year for the same period, Adani Total Gas said in its latest quarterly results announcement released Jan. 30.

The company continues to expand its core CGD business into new geographies after being awarded CGD licenses in the 9th, 10th and 11th bidding rounds, Manglani said.

In addition, it is signing agreements with "a lot of corporates" to promote LTM while also accelerating e-mobility through the launch of several EV charging stations, he said.

ATGL in January said it was building its first LNG Retail Outlet in Dahej, Gujarat which is expected to be commissioned by July 2024. Meanwhile, Adani TotalEnergies E-mobility Limited has already commissioned 329 EV charging points across 10 states while over 1050 EV charging points are under construction.

In addition, Adani TotalEnergies Biomass Limited is developing a biomass plant.

"So, Adani Gas is developing a holistic basket of clean and sustainable fuels," Manglani said.