With the country’s rich history of energy exploration, the first pipeline to be commissioned, as early as 1962, was the 1,167 km Naharkatia-Nunmati-Barauni crude oil pipeline. Today, the operational natural gas pipeline network is 16,121 km in length and has a combined design capacity of 383.8 million metric standard cubic metres per day (mmscmd).
The gas transportation sector in the country is dominated by three major players – GAIL (India) Limited, Gujarat State Petronet Limited (GSPL) and Reliance Gas Transportation Infrastructure Limited (RGTIL). These companies together account for about 94 per cent of the total pipeline network. Other companies operating natural gas pipelines include Assam Gas Company (AGCL), Oil India Limited (OIL), Indian Oil Corporation Limited (IOCL) and the Oil and Natural Gas Corporation (ONGC). GAIL operates the largest pipeline network, though RGTIL’s 80 mmscmd East-West gas pipeline is the largest pipeline in terms of design capacity.
Ongoing and upcoming projects
The government aims to establish a national gas grid with a pipeline network of around 30,000 km. As of September 2016, there were 12 gas pipelines under construction, which will add a total length of 13,821 km and have a design capacity of 567.76 mmscmd.
The Ministry of Petroleum and Natural Gas (MoPNG) has identified three pipeline projects spanning a total length of over 2,300 km for development through public-private partnerships, with viability gap funding (VGF) from the India Infrastructure Project Development Fund. Initially, the Ranchi-Talcher-Paradip pipeline will be developed on a pilot basis. GAIL is the sponsoring authority for the implementation of the project and has invited tenders for the appointment of financial-cum-transaction and legal advisers. Depending on the success of the project, the other two pipeline projects will be taken up.
Policy and regulations
The Policy for the Development of Natural Gas and City or Local Gas Distribution Networks was notified in 2006 and aims to promote investments, facilitate open access for all players, promote competition and secure consumer interest by ensuring gas availability and reasonable tariffs.
As per the policy, pipelines are to be built with authorisation from the PNGRB and the transportation tariff of the common carrier or contract carrier transmission pipelines and the methodology for tariff determination will be laid down by the regulatory board.
Key issues
The inadequate availability of gas is adversely impacting the capacity utilisation of existing pipelines as well as upcoming ones. Besides this, the country’s existing gas pipeline infrastructure is largely concentrated in Gujarat and Maharashtra and the lack of pipeline infrastructure to transport gas across the country has limited the development of gas-based industries to being located close to the sources of gas. This has resulted in a skewed pattern of natural gas consumption. Further, pipeline projects have often been stalled or have faced delays due to regulatory issues relating to land acquisition and environmental clearances. This problem is aggravated as projects transcend state boundaries.
Moreover, the zonal tariff structure has created a tariff system under which landlocked and underdeveloped states end up cross subsidising the industrialised states due to the latter’s proximity to gas sources. Finally, issues pertaining to legal disputes, disparity in tax rates across states, the non-availability of the “right of user”, contractual disagreements, complexity of terrain, and the non-availability of anchor customers continue to impede the development of pipelines in the country.
Outlook and the way forward
Though the government has taken various steps to ensure that the economy is adequately fuelled by a well-established pipeline infrastructure, much needs to be done given the underdeveloped gas pipeline grid.
The government is also looking at importing gas by means of cross-country pipelines such as the Turkmenistan-Afghanistan-Pakistan-India, Myanmar-India and Iran-Pakistan-India pipelines. However, despite having been under discussion for over a decade, not much progress has been made on the international gas pipelines. In the future, the country is also looking at securing oil and gas supplies by acquiring overseas energy resources.
