Switching to LNG could save India $1B in oil imports
What's the story
The Petroleum and Natural Gas Regulatory Board (PNGRB) has suggested that India could save $1 billion in crude oil imports every year. This can be achieved by switching 10% of its diesel consumption in the transport sector to liquefied natural gas (LNG). The study highlights a strong case for increasing LNG usage, especially in heavy-haul transport.
Transition potential
India can transition 30-40% diesel vehicles to LNG
The PNGRB study estimates that India can transition 30-40% of its diesel vehicles to LNG over the next five-seven years. This would involve replacing intra-city or inter-city busses, heavy-haul mining machinery, and haul trucks. The move could significantly cut down India's dependence on imported crude oil and save billions in import costs.
Cost comparison
LNG could replace 6.2 million tons of diesel
The study says that if 10% of diesel-fueled vehicles are converted to LNG, it would replace 6.2 million tons of diesel (equivalent to 5.9 million tons of LNG). At current Brent prices and $60 per barrel-linked LNG contracts, this would cost around $2.5 billion. Considering savings between 22-30%, the annual savings in crude import bill could be around $1 billion.
Consumer savings
Switching to LNG could save consumers ₹14,000 crore annually
The PNGRB study also highlights that switching 10% of vehicles from diesel to LNG would result in savings of around ₹528 per million British thermal unit (mBtu). This would translate into annual savings of ₹14,000 crore for end consumers. The regulator emphasized that purchase decisions are primarily driven by out-of-pocket operating costs and expenses they can bear.
Market growth
LNG consumption in transport sector and future potential
Currently, LNG consumption in the transport sector is nearly 50,000 tons per annum (tpa). However, with the right push, it can grow to a massive market of around six million tons per annum (mtpa) by 2030. The rapid expansion of gas infrastructure in India has bolstered the case for LNG as a viable transport fuel option.