Petronet LNG CEO Addresses Key Challenges in Achieving India’s Natural Gas Targets at India Energy Week 2024

Goa: In a Leadership Panel discussion on “Developing LNG markets and infrastructure” during the India Energy Week 2024 in Goa, Akshay Kumar Singh, the Managing Director and CEO of Petronet LNG, highlighted the critical factors influencing India’s ambitious target of increasing the natural gas share in the total energy mix to 15% by 2030. Currently, the share stands at 6%, making the proposed increase a significant challenge.

Singh identified affordable pricing and the synchronization of infrastructure in the supply chain as crucial components in achieving this target. Speaking at the event, he emphasized that the success of India’s transition to cleaner fuels depends on carefully calibrating prices to ensure they remain affordable, preventing potential consumers from switching to other, less clean alternatives.

“Pricing is a significant impediment in persuading users to switch to cleaner fossil fuel. Unaffordable prices will force consumers to switch over to other fuels, and it’s imperative to calibrate it carefully so that high prices do not end up destroying demand,” stated Singh.

The Petronet LNG chief asserted that the wider adoption of Liquified Natural Gas (LNG) is essential for the nation’s energy transition, considering its potential to replace a significant portion of crude oil, 85% of which is imported. India currently imports around 45% of the LNG used in the country.

While acknowledging pricing concerns, Singh highlighted the advantage of LNG being easily accessible across the country. Furthermore, he suggested that LNG has the potential to replace 10-20% of diesel used in transportation, contributing to a cleaner and more sustainable energy mix.

Singh stressed that the government’s commitment to transitioning the economy into a gas-based one is pivotal, and large-scale LNG adoption can be facilitated through government interventions, particularly in the adoption of concessional taxation for the fuel.

Sukhmal Jain, Director (Marketing) and Member of the Board of Directors at BPCL, echoed similar sentiments during the panel discussion. He emphasized that aligning costs, supply efficiency, and taxation is crucial for promoting natural gas adoption. Jain noted that natural gas adoption is a necessary step for India to join the league of developed countries, projecting LNG demand growth in the 4-5% range.

As part of the panel at IEW 2024, Andrew Barry, Chairman of ExxonMobil LNG Market Development and Vice President of Global LNG Marketing at ExxonMobil Oil & Gas Company, highlighted LNG as an excellent partner for renewable energy. He noted that LNG could address intermittency issues faced by renewable energy due to the cyclical nature of solar, wind, and hydro energy.

The panelists collectively acknowledged the challenges, including the cost of building LNG production and transmission infrastructure, as significant hurdles in the widespread adoption of clean fuel in India.