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City Gas Volumes Impacted In 2nd Wave, Drop Less Severe Than First

CNG volumes declined further as the COVID-19 wave intensified and more states imposed lockdowns, it said without giving details.

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City gas volumes have been impacted by the second wave of COVID-19 induced lockdowns, but the drop is less severe than the first wave, Icra said on Tuesday.

While lockdowns reduced mobility and vehicular mobility impacting CNG sales volumes by 20-25 per cent, gas consumption in industries dropped due to reduced activities. But the drop in piped cooking gas consumption is relatively lower.

The CGD sector domestic gas volumes declined by 12 per cent month-on-month to 15.2 million standard cubic meters per day in April 2021, as the transportation and passenger mobility segments were hit the hardest by lockdowns. However, this remains higher than the consumption of 4.2 mmscmd in April 2020, Icra said.

In May 2021, CNG volumes declined further as the COVID-19 wave intensified and more states imposed lockdowns, it said without giving details.

While the lockdowns have resulted in reduced industrial activity, the impact has not been as severe as in 2020.

The drop in LNG consumption for CGD entities remained lower than that of domestic gas, with volumes remaining roughly stagnant since February 2021. About 49 per cent of the gas required by the CGD sector is sourced from LNG imports.

'India’s City Gas Distribution (CGD) demand has slumped as a result of the second wave of COVID-19. The states with the highest penetration of city gas such as Gujarat, Maharashtra, Uttar Pradesh and the national capital region (NCR) have been severely hit by the second wave of COVID-19 and have imposed lockdowns to curb the spread of infections,' the agency said in a statement.

Compressed Natural Gas (CNG) volumes have declined as transportation and passenger mobility segments have been severely hit. Industrial consumption has also been adversely impacted owing to weaker demand, besides commercial demand has also been significantly reduced.

However, demand from the domestic segment remains resilient due to more at-home dining.

The weaker demand for natural gas has resulted in LNG cargoes being deferred and capacity utilisation of LNG terminals and pipelines has also dipped.

Sabyasachi Majumdar, Group Head & Senior Vice President at Icra, said, 'The impact of the second wave of COVID-19 is unlikely to be as severe as that witnessed in 2020. As expected, lockdowns in various cities and states have adversely impacted CNG demand, which has declined by 20-25 per cent. CNG volumes are expected to start recovering from the lows of May 2021 as several states have begun easing restrictions amid a decline in infections'.

While industrial activities have reduced, they have not halted in a manner similar to that in 2020, resulting in a relatively lower drop in industrial PNG consumption. Additionally, commercial volumes have been severely impacted, however, domestic volumes have remained resilient, he said.