India devotes major investment to raise its share of natural gas

India has been at the forefront of global growth over the past two decades and will remain a key driver of global growth in the coming decades. Availability of the right kind of energy at the right price has been the bedrock of fuelling India’s growth story. With significantly low per capita energy use and for achieving a target of ensuring reliable coverage and availability across the country, the nation’s focus has always been towards ensuring an energy paradigm of safe, secure, sustainable and affordable round the-clock access and availability.

Further, India made the historic announcement at Glasgow COP26 summit, of achieving Net Zero by the year 2070. India’s commitment marks a significant boost for low carbon energy and is a directional shift towards usage of more and more natural gas coupled with renewable sources of energy. As India moves at pace on its growth trajectory, the country is resolute on putting across a unique approach to energy usage for bridging the past and the future.

The Government of India is making significant efforts to increase the share of natural gas, an ideal transition fuel, in the country’s primary energy mix from the current level of about 6% to 15% by the end of 2030 making India a gas-based economy. This is expected to increase India’s gas consumption by around 200% taking current gas consumption of around 188 MMSCMD (averaged in FY 2023-24) to around 550 MMSCMD by the year 2030.

In FY 2023-24, the domestic gas consumption accounted for 98.4 MMSCMD and LNG accounted for 89.5 MMSCMD. Considering the expected growth in natural gas consumption as well as limited domestic gas availability in future years (new fields are expected to plateau within next 5-6 years), the share of LNG is projected to rise from 47.6% (averaged in FY 2023-24) to around 75% by 2035. Hence, in order to meet such growing demand for gas, there is a pressing need to enhance India’s LNG regasification infrastructure to around 150 MMTPA (considering 80% utilization) from presently available regasification capacity of 47.7 MMTPA and under construction regasification capacity of around 19 MMTPA, which totals to around 66.7 MMTPA.

In this context, Petronet LNG Ltd is expanding regasification capacity of its Dahej terminal from 17.5 MMTPA to 22.5 MMTPA, increasing its total regasification capacity to 27.5 MMTPA (including the 5 MMTPA terminal at Kochi, South India). Additionally, the company is in the process of establishing a new LNG regasification terminal of 4 MMTPA capacity on India’s eastern coast in Gopalpur, Odisha. Huge investments are taking place for infrastructure developments in the form of natural gas pipeline grid and development of City Gas Distribution (CGD) networks across the entire country.

On the front of cross-country pipeline network, considered as underground energy highways, India is adding another 10,789 kms natural gas pipeline network to its current operational length of 24,921 Kms. (as of June 2024 ). The City Gas Distribution network has been expanding at a brisk pace. With the completion of 12 & 12A CGD bidding rounds by PNGRB, for CGD entity authorization, the CGD network now covers almost the entire country, except Andaman and Nicobar Islands and Lakshadweep and other smaller islands. As of May 2024, there were 7,011 CNG stations and over 13.3 million PNG connections for fuelling the environment-friendly fossil fuel to vehicles and supplying the same to kitchens. Further, the government has also been promoting setting up of LNG stations on national highways for promotion of LNG in long-haul trucks.

Adequate and strategically located storage and regasification facilities, connected with pipeline networks, are necessary to balance supply and demand fluctuations, especially during peak consumption periods. In this direction, PLL has added two storage tanks of capacity of 170,000 cubic meters each at its Dahej terminal adding to its already available storage capacity of around 1 million cubic meters. This not only enhances the energy security of our nation but also establishes India as a key player in the global LNG market.

The infrastructure’s adequacy will determine the nation’s ability to efficiently handle the anticipated growth, ensuring a secure and reliable supply of natural gas and RLNG. Clear and supportive policies of the Government of India witnessed in last decade have been of great help in creating a conducive environment for investments, providing a level playing field for industry players, and instilling confidence among all the stakeholders.