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    COVID-19 hits Indian city gas demand

Summary

Gas volumes in India's city gas distribution (CGD) segment declined 12% month/month in April, according to ICRA Research.

by: Shardul Sharma

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COVID-19 hits Indian city gas demand

Gas volumes in India's city gas distribution (CGD) segment declined 12% month/month in April to 15mn m3/day and slipped further in May due to restrictions imposed by the various state governments to stop the spread of the second wave of the COVID-19 pandemic, ICRA Research said in a report published on June 8.

The states with the highest penetration of city gas such as Gujarat, Maharashtra, Uttar Pradesh and the Delhi National Capital Region region have been severely hit by the second wave of COVID-19 and imposed lockdowns to curb the spread of infections. CNG volumes have declined as transportation and passenger mobility segments have been severely hit, ICRA said.

Industrial consumption has also been adversely impacted owing to weaker demand besides which commercial demand has significantly reduced. However, demand from the domestic segment remains resilient due to more at-home dining. The weaker demand for natural gas has resulted in LNG cargoes being deferred and capacity utilisation of LNG terminals and pipelines has also dipped, it said.

Since the restrictions imposed this year has been much milder than that what was imposed during the first wave of COVID-19 last year, the impact on demand has been less severe. The gas demand in April this year was higher than 4.2mn m3/day seen in April 2020, when India was under a complete lockdown.

“CNG volumes are expected to start recovering from the lows of May 2021 as several states have begun easing restrictions amid a decline in infections," Sabyasachi Majumdar, vice president at ICRA said. "While industrial activities have reduced, they have not halted in a manner similar to that in 2020, resulting in a relatively lower drop in industrial PNG consumption. Additionally, commercial volumes have been severely impacted however domestic volumes have remained resilient."

Due to milder lockdowns this year, the drop in regasified LNG (RLNG) consumption for CGD entities remained lower than that of domestic gas, with volumes remaining roughly stagnant since February 2021. Approximately 49% of the gas required by the CGD sector is sourced from RLNG, ICRA said.