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Page added on September 15, 2017

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Coal Shortage Sends India Scrambling For NatGas

Coal Shortage Sends India Scrambling For NatGas thumbnail

Big disappointment in the global natural gas industry this week, with majors Total and Eni coming up largely dry in a much-anticipated well offshore Cyprus.

But elsewhere things are turning extremely bullish for natgas. With one of the world’s fastest-emerging energy consumers scrambling to get all the supply it can.

India.

 Local media reported this week that India’s power generators are seeing a sudden surge in natgas buying because of an “acute” shortage in the country’s go-to energy fuel: coal.

After enjoying years of ample coal supply, India’s power sector has seen inventories slip drastically into the red in recent months. With ten major power plants classified as “critical”, with less than seven days of coal stocks — and five of those being “super critical” with less than four days of coal supply.
And that drastic shortage has reportedly turned these generators to natural gas in a major way.

Sources said India’s generators have purchased 10 million cubic meters (350 million cubic feet) during “the last couple days”. Indicating energy producers are getting desperate in keeping their operations in business amid the coal shortage.

This potentially has long-term implications for global natural gas. Because of a peculiar feature of India’s energy landscape: a fleet of unused gas-fired plants.

India in fact has over 25 GW of installed gas-driven generating capacity. But here’s the thing: 55 percent of that capacity usually never runs. Because it’s “technically stranded” — having no access to natgas feed at commercially-competitive prices.

But the coal crisis is changing the economics here. Power operators are so desperate to keep the lights on, they’re willing to pay the higher prices required to deliver gas to the stranded power plants — causing this week’s major surge in natgas buying.

If the coal shortage persists, that demand could become permanent. Watch for weekly data on coal stocks at India’s power plants, and stats on natural gas usage across India — which could have knock-on effects on imports.

Here’s to un-stranding,

By Dave Forest

oilprice.com



6 Comments on "Coal Shortage Sends India Scrambling For NatGas"

  1. rockman on Fri, 15th Sep 2017 9:10 am 

    There is no sudden “acute shortage” of coal in India: it has been importing coal for years. And that shift towards NG is despite India being the 3rd coal producer and 2nd largest coal importer on the planet. And while India may be planning on increased NG consumption it’s not like it is turning away from coal: A report by the Indian government indicates the country will double its coal production to 1.5 billion tons by 2020. Which is why the country hopes to cut its imports to zero by the end of this year. The potential shortages at the power plants is a management problem and not a lack of available imported coal: they reduced delivers too quickly for domestic production to fill the gap. They can buy from the abundant spot market anytime they want: the Aussie would be more than happy to bury Indian with coal.

    This is just part of the rant the “King Coal is dead”. As far as the Indian govt’s it’s alive and doing very well. India’s big problem: despite abundant reserves it’s mining industry is inefficient. Despite looking at increased NG consumption “India would like to use its abundant coal reserves as it provides a cheap source of energy and ensures energy security as well,” the report said. However, the report suggests India will need to resume importing coal starting in 2037 and as much as 62 percent of its total by 2047 if the country doesn’t make its coal mining more efficient.

    King Coal has a bright future, at least in India. India, the world’s #3 coal consumer right behind #2…the UNITED STATES OF AMERICA. The USA that burns about 50% more coal then India.

  2. Antius on Fri, 15th Sep 2017 9:14 am 

    This goes a long way to explaining why India (a poor country) would bother investing in solar and wind energy sources. These things need back-up power plants, which must be manned all of the time. The only benefit the renewable energy source provides is to save fuel, which is a dubious benefit so long as fuel is plentiful.

    In India, fossil fuel production appears to be coming up against some serious constraints, leading to physical shortages. Under these circumstances, using renewable energy might actually be doing something useful enough to justify itself.

  3. Antius on Fri, 15th Sep 2017 9:20 am 

    “The potential shortages at the power plants is a management problem and not a lack of available imported coal: they reduced delivers too quickly for domestic production to fill the gap.

    A report by the Indian government indicates the country will double its coal production to 1.5 billion tons by 2020.”

    Thanks. It looks like the Indians are trying to grow every energy source as fast as they can.

  4. Duncan Idaho on Fri, 15th Sep 2017 9:52 am 

    India is not even remotely survivable.
    But I think Pakistan will go over the cliff first.

  5. Sissyfuss on Fri, 15th Sep 2017 9:53 am 

    It’s good to see that the Paris Accords are doing their job. Pretending to accomplish goals by ignoring the reality taking place. Even the environment is becoming a Ponzi scheme.

  6. rockman on Fri, 15th Sep 2017 4:26 pm 

    Antius – Yep. Like it or not coal will play a significant part of Imdia’s future. India holds the fifth biggest coal reserves in the world. The country’s proved coal reserves as of December 2013 were estimated at 60.6Bt. Based on its current consumption (500 mm tons/yr) those reserves represent 120 years of consumption. Which makes me wonder how much of the increase in NG consumption will be heading towards power generation and how much for residential and business comsumption.

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