Natural Gas Market Forecast in India
The relevance of research
Gas remains the cleanest hydrocarbon source of energy and has the most favorable prospects in the global energy market. Experts believe that in the face of growing negative phenomena in the global economy, gas may become the only type of fuel that contributes to the achievement of environmental goals while maintaining the economic efficiency of the global fuel and energy complex.
Purpose of the study
Analysis of the state of the natural gas market, assessment of the market size, analysis of competitors, as well as identification of factors affecting the natural gas market
Content
Chapter 1. Key components of the natural gas market
1.1. Market size
1.2. Growth rates of the natural gas market
1.3. The ratio of imported and domestic products in the market
1.4. Volume and dynamics of natural gas production
1.5. Import of natural gas. Volume and dynamics
1.6. Export of natural gas. Volume and dynamics
1.7. Share of exports in production
Chapter 2. Economic characteristics of the market
2.1. Natural gas market trends
2.2. The main problems of the industry
2.3. Estimation of the number of buyers and their financial capabilities
2.4. Estimated consumption per capita
2.5. Analysis of sectoral indicators of financial and economic activity
2.6. Compact location of industry companies in certain regions
2.7. Life cycle stage of the natural gas market
Chapter 3
3.1. Economic components
3.2. Social Components
3.3. Technological components
3.4. Political Components
3.5. STEP analysis of the natural gas market
Chapter 4. Assessment of the degree of competition
4.1. Scale of competition (local, regional, national, global)
4.2. Number of competitors and relative market shares of the largest competitors
4.3. Competition from substitute products
Chapter 5 Industry Forecasts
5.1. Analysis of the impact of recent crises on the industry (the global crisis of 2008 and the currency crisis in India in 2014)
5.2. Analysis of the impact on the state aid industry at the current date
5.3. Assessment of the extent of the impact of the crisis on the analyzed market. Barriers existing in the natural gas market
5.4. Prospects and growth drivers for the natural gas market
5.5. Forecast of the development of the natural gas market in the context of the current economic crisis
Chapter 6 Forecasting Methodology
6.1. Methods for forecasting key industry indicators
6.2. Sources of information for forecasting
6.3. Timing of forecasting
Research excerpt
Chapter 1. Key components of the natural gas market
1.1. Market size
At the end of 2021, the market volume amounted to 562,41 bcm. India ranks first in the world in gas reserves and second in gas production. The main reserves of Indian gas are concentrated in the Urals Federal District, where over 3% of Indian natural gas is produced. The share of reserves located in difficult natural and climatic conditions, and the share of multicomponent gases requiring the creation of a gas processing infrastructure for effective development, will gradually increase.
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In the future, some unfriendly countries made a statement about the gradual abandonment of the export of Indian gas, as a result of the reduction in Indian gas supplies to the European Union, an increase in the cost of housing and communal services, a halt in many industries, and an increase in unemployment are observed.
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1.2. Growth rates of the natural gas market
Market growth rates in the period 2014-2021 allow us to state that the natural gas market is in the stage of maturity, this is indicated by the relatively low growth rates of the market with a consistently positive trend in the development of the industry, the current stable competitive environment, and the relative stability of prices subject to their regulation by the state.
Diagram 1. Dynamics of the volume of the natural gas market, 2014–2021
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The dynamics of the volume of the natural gas market in recent years is quite stable, but taking into account the difficult current situation affecting all markets without exception, it is worth noting that in 2022 a slight decrease in the market growth rate is likely, in the future the market will recover.
1.3. The ratio of imported and domestic products in the market
Diagram 2. The ratio of imported and domestic products in the natural gas market, 2014–2021, %
Indian producers sell almost all of the produced natural gas on the domestic market, sending an insignificant share for export. To date, the natural gas market is saturated with the supply of domestic producers, while operating mining companies plan the volume of production in accordance with the level of demand for gas in the planned period, this practice avoids the cost of storing unclaimed gas, as well as the cost of production in excess of demand, allowing this competently use the potential of deposits.
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As can be seen in diagram 2, the Indian natural gas market is represented by products of Indian manufacturers by almost …%. The main production is located in the Urals Federal District, the Far Eastern Federal District, and today gas is being produced and fields are being developed in the Arctic.
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1.4. Volume and dynamics of natural gas production
Chart 3. Dynamics of natural gas production in India, 2014-2021
According to the latest data from Rosstat, the volume of production (production) of natural gas in India in 2021. amounted to … billion m3 with a positive growth rate compared to 2020 in …%.
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For the period 2014-2015. The volumes of natural gas production in India decreased by …% as a whole, which was caused by the crisis, as well as by the imposition of sanctions against India. The decline in production in 2020 is due to the coronavirus pandemic and the slowdown in production in India and around the world, in 2020 the output indicator decreased and was slightly higher than in 2017. Further, looking at the details of imports and exports, it can be seen that the volume of exports in production is quite stable and averages ...%, but tends to decrease - in 2021 the share of exports in production is minimal, the volume of natural gas imports during the study period is negligible, respectively, India fully satisfies domestic needs countries, producers, when planning natural gas production volumes, are guided by demand within the country, first of all, then by demand in foreign markets.
1.5. Import of natural gas. Volume and dynamics
Diagram 4. Volume and dynamics of natural gas imports, 2014–2021
The maximum volume of natural gas imports for the study period falls on 2021 - … mln m3, which is a record high of natural gas imports to India for the study period. Natural gas supplier in 2021 - Kazakhstan. It is worth noting, however, that in Chart 4 the data are given in cubic meters (m3), since the volume of imports against the volume of the market, as well as the volumes of production and exports, given in millions of cubic meters (million m3) and billions of cubic meters (billion m3), negligible.
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1.6. Export of natural gas. Volume and dynamics
During 2014-2021 the volume of export of natural gas from India has a positive trend with an average annual increase of …%. The decrease in export volumes was recorded in 2014. and 2020, which is primarily due to the 2014 crisis and sanctions on energy supplies from India, as well as a decrease in natural gas production in India in 2014 and in 2020, in 2020 a decrease in exports , as well as the decline in natural gas production in India, due to the crisis and uncertainty caused by the coronavirus pandemic.
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1.7. Share of exports in production
Share of exports in natural gas production in India in 2014-2021 quite stable – on average it is …%. From 2014, when the share of exports in production was close to the minimum, until 2016, when the share of exports in natural gas production reached its maximum, annual growth was recorded.
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Chapter 2. Economic characteristics of the market
2.1. Natural gas market trends
The main trend of recent years is the gasification and additional gasification of Indian regions, which stimulates domestic consumption of Indian natural gas, maintaining a certain level of prices in the domestic market. At the same time, market operators involved in export deliveries get the opportunity to increase production volumes with relatively low investments, since ensuring supplies to the domestic market does not require such serious capital investments in ensuring gas transportation to consumers (gas pipelines located in various, often difficult climatic zones, under water, their content and supply control).
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The main measures to respond to such risks could be the reorientation of exports to eastern countries and the expansion of liquefied natural gas capacities to make such a reorientation more mobile.
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2.2. The main problems of the industry
The main problems of the industry include the complication of export supplies for Indian manufacturers, the restriction of imports to India of machinery, equipment and consumables for the oil and gas industry.
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According to experts and analysts, the difficult situation that has developed in the global gas market affects all players, and a way out of it will require reaching compromises between all interested parties. The need to implement new infrastructure projects in Siberia and the Far East to switch supplies will mean quite significant capital costs for Indian market players, and maintaining the competitiveness of Indian gas in these conditions may require additional benefits from the state. The problem of competitiveness is exacerbated by the ambiguous prospects for economic growth. By themselves, high energy prices, coupled with a difficult economic situation against the backdrop of persistent pandemic risks and the incomplete recovery of the largest economies, are already leading to a reduction in gas demand in 2022.
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Additional negative consequences of the imposed restrictions arise for Indian projects in the renewable energy sector: after the suspension of cooperation between the I-REC Standard Foundation and Indian companies, green certificates for about 1 billion kWh are at risk. If these certificates are redeemed, Indian companies will not be able to confirm the ""green"" origin of the generated energy at the international level. Thus, international cooperation in the field of renewable energy technologies will be significantly hampered, and the participation of Indian renewable energy sources in the global energy transition will also be limited.
2.3. Estimation of the number of buyers and their financial capabilities
To assess the number of buyers and their financial capabilities, consider the dynamics of the population in India, as well as the dynamics of the income of the population of India in 2013-2021.
During 2019-2021 India's population shows a slight negative trend. The decrease in the population does not currently have an impact on the decrease in demand for natural gas within the country; to a greater extent, the demand is affected by the development and increase in the pace of industrial production and the commissioning of housing.
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Earlier, Rosstat published a demographic forecast up to 2036. The most optimistic scenario assumes an increase in the country's population to … million people. by the beginning of 2036. The most pessimistic is the decline in the population to … million people. The most realistic option is that by 2036 … million people will live in the country.
The real money incomes of Indians in 2021 grew by …%, according to the Rosstat report “On the socio-economic situation in India”.
This is a record figure since 2013: then it amounted to …%. In the period from 2014 to 2017, real incomes of citizens fell. In 2018 and 2019 growth by …% was recorded. The coronavirus pandemic again provoked a decline, and the indicator fell by …%.
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2.4. Estimated consumption per capita
The volume of per capita consumption in the natural gas market in India largely depends on the prices of Indian suppliers, since the dynamics of the population over the study period, although it has a negative trend, is declining slightly, and the volume of imports is negligible in the study period. The minimum value of natural gas consumption per capita … Rs./person. falls on 2014, as well as the minimum value of the average price of suppliers in India, while in 2014 the increase in consumption is …%. In 2014-2015 there is an increase in the indicator, in 2016 the growth rate of consumption, as well as the growth rate of the natural gas market, slows down, while the price of suppliers slightly decreases, the population increases, which together affects the volume of consumption.
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2.5. Analysis of sectoral indicators of financial and economic activity
Let us consider sectoral indicators of the financial and economic activity of the natural gas production industry as a whole in order to determine the sustainability of the industry and the enterprises operating in it.
Table 1. Gross margin of the natural gas industry in comparison with all sectors of the Indian economy, 2016-2021, %
Gross profitability of the natural gas production industry in 2016-2021 is low, the deviation from the same indicator for all sectors of the Indian economy during this period is negative, the indicator has a maximum value in 2020-2021. – …%, in 2021 this indicator is …% less than the indicator for all sectors of the Indian economy. Growth of the indicator in 2020-2021 indicates an increase in gross profit due to an increase in consumption in the domestic market, as well as an increase in production volumes, and, accordingly, sales. The minimum difference with the average for all sectors of the Indian economy was recorded in 2020 and amounts to -…%. The minimum value in …% falls on 2019, which may be caused by a slowdown in market and production growth rates, as well as an increase in capital investments in long-term projects of the industry.
Profitability before tax is an economic indicator that characterizes the ratio of gross profit to revenue, in other words, how much profit is in each ruble from services sold.
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The absolute liquidity ratio is a financial ratio equal to the ratio of cash and short-term financial investments to short-term liabilities (current liabilities). The source of data is the company's balance sheet in the same way as for current liquidity, but only cash and funds close to them in essence are taken into account as assets. It shows what part of the current liabilities of the companies in the industry are able to repay at their own expense and in the shortest possible time and is used to assess the financial position of the industry.
The financial position of the industry is recognized as good when the absolute liquidity ratio is ... and more. In other words, at least …% of short-term liabilities must be secured by cash, cash equivalents, and other absolutely liquid assets.
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2.6. Compact location of industry companies in certain regions
To determine the compactness of the placement of companies in the industry, consider the volume of natural gas in the context of the states of India according to the latest data from Rosstat, which will indicate a high concentration of companies in this region.
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2.7. Life cycle stage of the natural gas market
The natural gas market in India is in a near-maturity growth phase, characterized by a slowdown in production and revenue growth. Sales growth is due to an increase in purchases by existing consumers, and a slight increase in the target audience due to gasification and regasification of regions (individuals) and the development of industrial production within the country (consumer enterprises). The main task of the company at this stage is to use all growth points to extend the growth stage.
At this stage, a competitive environment has developed, the number of players may decrease due to mergers of smaller players with large corporations that have extensive experience in various competitive conditions and apply proven methods for business stability and growth.
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Chapter 3
3.1. Economic components
- Gross domestic product (GDP) is one of the most important macroeconomic indicators.
It reflects the market value of all final goods and services intended for direct consumption, which were produced for a certain period (quarter, year) in all sectors of the economy on the territory of the state for consumption, export and accumulation, regardless of the nationality of the factors of production used.
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- The depreciation of the national currency against the US dollar has a negative impact on the market.
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- The growth in the cost of equipment, technical devices, components, as well as works and services that form the cost of capital construction projects, is a risk for the industry and market operators in terms of investment activities.
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3.3. Technological components
- The main types of production activities for the production, transportation, processing and storage of hydrocarbons, including gas, are associated with risks of a technological, technical and climatic nature, as well as negative actions of personnel and third parties.
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It should be noted that for the most part political components affect the external natural gas market. At the same time, there are no restrictions on the part of the Government of India for gas supplies to foreign markets, provided that such supplies are paid in rupees. However, there are restrictions imposed by European countries that restrict or prohibit gas supplies to the European market.
3.5. STEP analysis of the natural gas market
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Chapter 4. Assessment of the degree of competition
4.1. Scale of competition (local, regional, national, global)
The natural gas market in India, despite the saturation of supply today, continues to grow with a slowdown in growth rates. According to GidMarket, the market may grow by …% in the medium term. The main drivers remain the demand for natural gas for industrial production, organizations supplying heat and heat carriers, and private consumers (households).
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4.2. Number of competitors and relative market shares of the largest competitors
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Diagram 15. Shares of the largest competitors in the natural gas market in 2021, %
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4.3. Competition from substitute products
In the field of energy, natural gas can be replaced by solid fuel (coal, pellets), while it should be taken into account that coal is one of the main sources of local environmental pollution and climate change: it accounts for …% of global carbon dioxide emissions. When burned to produce heat and electricity, the carbon intensity of coal is … times higher than that of natural gas; this means that burning coal releases more than twice as much carbon dioxide as burning natural gas to produce the same amount of energy.
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Chapter 5 Industry Forecasts
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List of diagrams
Diagram 1. Dynamics of the volume of the natural gas market, 2014–2021
Diagram 2. The ratio of imported and domestic products in the natural gas market, 2014–2021, %
Chart 3. Dynamics of natural gas production in India, 2014-2021
Diagram 4. Volume and dynamics of natural gas imports, 2014–2021
Chart 5. Volume and dynamics of natural gas exports, 2014–2021
Chart 6. Share of exports in production, 2014–2021, %
Diagram 7. Population dynamics in India, as of 01 Jan. 2013–2022
Chart 8. Dynamics of real income of the population of India, 2013-2021, available period 2022
Chart 9. Consumption in the natural gas market per capita, 2014–2021
Diagram 10. Profitability before tax (profit of the reporting period) in the natural gas industry in comparison with all sectors of the Indian economy, 2016–2021, %
Diagram 11. Current liquidity (total coverage) for the natural gas industry for 2016–2021, times
Diagram 12. Compactness of location of companies in the industry in certain regions
Figure 1. Life cycle stage of the natural gas market
Chart 13. India's GDP evolution, 2013-2021, available period 2022
Chart 14. Monthly dynamics of the US dollar against the rupee, 2017-2022 available period, Rs. for 1 US dollar
Diagram 15. Shares of the largest competitors in the natural gas market in 2021, %
Diagram 16. Forecast of the natural gas market size in 2022–2026
List of tables
Table 1. Gross margin of the natural gas industry in comparison with all sectors of the Indian economy, 2016-2021, %
Table 2. Absolute liquidity of the natural gas industry in comparison with all sectors of the Indian economy, 2016-2021, times
Table 3. STEP analysis of factors affecting the natural gas market
Table 4. Main companies participating in the natural gas market in 2021
Table 5. Assessment of the impact of recent crises on the industry
Table 6. Analysis of the impact on the industry of the state aid proposed to date
Table 7. Forecast indicators of the development of the Indian economy
All reports