Russia-Ukraine war derails India#39;s cheap natural gas dream

Russia-Ukraine war derails India#39;s cheap natural gas dream

India was encouraging an expensive expansion of fuel networks in its cities with make-believe prices. Then the war happened





April 27, 2022 / 09:53 AM IST





Call it poor judgment or bad luck, but India’s expansion of natural gas coverage to more than 90 percent of its population couldn’t have come at a worse time. In January, Adani Total Gas Ltd. and others won keenly-contested licenses to add new areas to city gas networks; in February, Vladimir Putin invaded Ukraine. Suddenly, billions of dollars in investment are on shaky ground.

After an extraordinary surge last month, European spot prices of natural gas are stabilising — at three times the average of the past decade. Contracted supplies of liquefied natural gas are cheaper, but with Europe scrambling to secure non-Russian fuel, the discount is shrinking, according to a Bloomberg News report last week. Worse still, it’s unlikely to be a blip: Credit Suisse Group AG predicts that the Russian gas deficit will lead to an annual global LNG shortage of nearly 100 million tons by the middle of the decade.

This isn’t what New Delhi anticipated when it decided to raise the share of natural gas in India’s