Time good for India to firm up long-term LNG contracts: IEA
India must tie up long-term LNG contracts now as global prices are low and there could be an additional downward pressure on prices in the future as new players enter the market, Executive Director of the International Energy Agency, Fatih Birol said.Mr.Birol also commented on the future of oil prices, a move unusual for the normally reticent IEA.
“We expect $50 oil for 10 years, before it converges at $80. In a low price world, the reliance on Middle East oil will increase. The Middle East contributes around 50 per cent of oil exports today. This will rise to around 75 per cent,” Mr Birol said at the release of the India Energy Outlook report, a special country-specific part of the World Energy Outlook report.
Minister of Petroleum and Natural Gas, Dharmendra Pradhan, said that India’s rising energy stature globally was well-deserved. “With a large economy, growing population with low per capita energy consumption, an expanding middle-class and increasing urbanisation, there is only one way for India’s energy demands to go: that is up,” he said.
The India Energy Outlook report predicts that India will contribute more than any other country to the rise in global energy demand by 2040. However, it adds that on a per capita basis, India’s energy demand will still be 40 per cent below the world average at that time.“India’s total energy demand more than doubles in our main scenario, propelled higher by an economy that is more than five times larger in 2040 and a demographic expansion that makes India the world’s most populous country.
“With energy use declining in many developed countries and China entering a much less energy-intensive phase in its development, India emerges as a major driving force in global trends,” the report said.
A “surging” consumption of coal in power generation and industry will make India the largest source of growth in global coal use by 2040. Similarly, oil demand is to increase more than in any other country, projected to reach 10 million barrels a day by 2040, according to the report.Natural gas consumption is expected to triple by that time, to 175 billion cubic metres. However, at eight per cent, it is still expected to contribute a very small proportion of the energy mix in the country.
“India’s power system needs to almost quadruple in size by 2040 to catch up and keep pace with electricity demand that, boosted by rising incomes and new connections to the grid, increases at almost five per cent per year,” according to the report.Of the 900 GW of new capacity needed to keep pace with demand India will see over 50 per cent of this new capacity coming from renewables and nuclear sources. However, domestic production will be hard-pressed to meet the demand.