Liquefied natural gas (LNG) is expected to emerge as the “most preferred” transportation fuel for long-haul heavy-duty trucks after 2030 as India aims to transition one-third of its fleet from diesel to run on the super-chilled commodity.
The projections form part of the Petroleum and Natural Gas Regulatory Board (PNGRB) report on natural gas projections for 2030 and 2040.
The regulator opined that favourable global market trends for LNG availability and gas infrastructure, such as LNG terminals and pipelines, as well as its supportive policies are expected to play a significant role in increasing natural gas adoption.
“LNG is likely to emerge as the preferred transportation fuel post 2030. LNG as a long-haul transportation fuel could be a game changer, with the potential to emulate China’s success in reducing diesel dependency,” it said.
Currently, India operates around 700 LNG-fired trucks with 20 filling stations and marginal usage, compared to China’s more than 7.25 lakh vehicles and over 6,000 filing stations consuming 48 million standard cubic meters per day (MSCMD).
With global LNG supply expected to increase post 2027, this could present India with an opportunity for long-term supply deals at more competitive prices, it added.
The regulator anticipates that LNG availability at prices below $9 per million British thermal units (mBtu) assumed on a Delivered ex-ship (DES) basis would likely boost demand, considering the price advantage over alternate fuels.
Decarbonising transport
Diesel-powered road transport contributes nearly 65-70 per cent of freight and accounts for 35-40 per cent of the total road transport emissions.
The regulator believes that LNG emerges as a logical, efficient, and cheaper fuel source for decarbonising long-haul trucking.
The Ministry of Petroleum & Natural Gas (MoPNG) has already mandated opening 50 LNG stations. The plan is to have 1,000 filling stations across key highways and industrial corridors.
To ensure price stability, allocation of domestic gas is the demand from some quarters, PNGRB said.
“Conducive ecosystem includes tapping collective demand for OEMs to establish dedicated manufacturing lines, free road tolls, and allocating domestic gas for LNG vehicles,” it added.
The PNGRB report has made projections based on two scenarios. The Good to Go (GtG) scenario assumes moderate growth and expected developments based on current trends and commitments.
While the Good to Best (GtB) scenario considers accelerated progress, favourable policy implementation, and enhanced investments leading to higher-than-expected growth.
By 2030, the number of LNG trucks is projected to reach 30,000 in the GtG scenario and 50,000 in the GtB scenario. By 2040, the number of LNG trucks is expected to grow to 2,00,000 in the GtG scenario and 5,00,000 in the GtB scenario, the regulator projected.
Natural gas demand
PNGRB expects India’s natural gas (NG) demand to rise around 8 per cent annually to 297 MSCMD by 2030 under the GtG scenario and reach 495 MSCMD by 2040 with a CAGR of around 5 per cent under the same scenario.
Under a more optimistic GtB scenario, NG consumption could jump to 365 MSCMD by 2030 and 630 MSCMD by 2040, it added.
City gas distribution (CGD) is set to be the largest natural gas demand driver by 2030. It will account for 29 per cent of total consumption in 2030 and 44 per cent of total consumption in 2040.
Gas consumption by refineries and petrochemical complexes is also expected to nearly double to 43.3 MSCMD by 2030 from the current 22 MSCMD, which is helped by a growing focus on petrochemical integration. Growth in gas-based power generation and fertiliser usage is expected to be moderate.
Overall, India’s NG consumption will grow from around 187 MSCMD to 297 MSCMD under GtG and 365 MSCMD under GtB by 2030. A decade later, the usage is likely to grow to 495 MSCMD (under GtG) and 630 MSCMD (GtB).