Indian Oil Corp., the nation's biggest refiner that's also boosting its liquefied natural gas business, is lifting purchases of the fuel to take advantage of a price plunge amid a glut.
The state-run company plans to buy two LNG shipments per month in the spot market for six months from October, according to Debasis Sen, director of planning and business development. That compares with a total of nine spot cargoes for the previous year, when it started importing the commodity directly.
India is among buyers seeking more cargoes of the cleaner fuel as spot prices have fallen about 60 per cent since October 2014 amid a supply glut. While demand growth prospects are limited in more mature markets like Japan and South Korea, consumption in India, China and emerging Asian nations will increase the US Energy Information Administration forecasts. India's consumption may rise 11 per cent a year over the next decade, BMI Research predicts.
"Low prices have made LNG more affordable," Sen said in a interview. "We are witnessing strong demand from customers such as fertilizer, power plants and glass industries."
Indian Oil sold 1.93 million metric tons of natural gas during the year through March 31, up 6.9 per cent from a year ago, according to a statement. The refiner holds rights to market 30 per cent of the fuel imported by Petronet LNG Ltd., the country's top purchaser. While IOC gets supplies sourced from Petronet, it is seeking to increase direct procurement through spot deals.
Higher imports will help New Delhi-based Indian Oil diversify further into natural gas. Prime Minister Narendra Modi's administration is seeking greater use of the cleaner fuel in the country's energy mix to curtail carbon emissions by the world's second-most populous nation.
The nation has more than doubled its imports in the past seven years as domestic supplies dried up. Purchases rose 15 per cent from a year earlier to 16.08 million tons during financial year ended March 31, 2016, according to provisional data from the oil ministry's Petroleum Planning & Analysis Cell.
The country plans to increase its LNG import capacity to 55 million tons per year within five years, from about 21 million now, Oil Minister Dharmendra Pradhan said.
Petronet has expanded the capacity of the Dahej terminal in western India, the nation's largest LNG import and re-gasification terminal, by 50 per cent to 15 million tons per year. Indian Oil, which owns 12.5 per cent of the importer, has booked a portion of the increased capacity to bring in more shipments directly.
"We were facing capacity constraints at Dahej in importing LNG on our own and could purchase only one shipment so far since April," Sen said. "But now with the expansion, we can accommodate two cargoes a month."
