Now, let’s take a look at other Asian countries. India, the world’s fourth-largest LNG importer, saw a 15.2% decline in the volume of LNG imports compared with 2021 (though their total cost increased 44.5%), with the same trend observed in Bangladesh (-44.5%) and Pakistan (-18.9%), while in South Asia as a whole, LNG purchases dropped 16% YoY.
While in previous years, emerging Asia was considered the primary driver of global LNG demand, nowadays, amid mounting geopolitical tensions, demand there is restrained by a number of factors,
which may erode LNG’s competitive advantage over alternative fuels in the mid term. Rapidly depleting foreign-currency reserves, weaker domestic currencies and growing inflationary pressures, let alone unaffordable spot prices and contractual disputes, pose major risks to LNG consumption in India, Pakistan and Bangladesh.
Governments in South Asia are now warming up to renewables and taking steps to regulate energy demand and supply. In 2023, India plans to run 2.5 GW of peaking gas units under a special scheme where gas will be sourced in advance and paid for by the state-owned gas company GAIL.
To avoid electricity interruptions, both Pakistan
are determined to carry on with energy austerity measures, such as load shedding and shorter opening hours for businesses.
The Indian government continues to subsidize the domestic fertilizer sector, the biggest consumer of LNG. Between January and November 2022, the sector’s consumption increased from 8.3 to 10.3 million tonnes, while consumption in the city gas sector dropped from 3.8 to 1.1 million tonnes, and petrochemicals from 1.9 to 0.5 million tonnes.
Faced with the high subsidy burden, India allowed fertilizer companies to procure 20% of their gas supplies from the domestic spot market. With this move, the government expects to cut its bill by 240 billion rupees,
or around $3 billion. India is also revising its domestic pricing mechanism, with one proposed step being to cap the price at $6.5 per million BTU.