India’s natural gas consumption is expected to increase from 55 billion cubic metres (bcm) in 2016-17 to about 70 bcm by 2022 and 100-110 bcm by 2030. In order to meet this demand, several gas operators are stepping up efforts to develop and expand their pipeline network infrastructure. Besides, the country’s appetite for gas and the government’s push to build infrastructure is nudging state-owned oil companies to relook at and expand their natural gas business. However, the under-construction pipelines have exhibited tardy progress so far.
Operational pipeline infrastructure
As on April 1, 2018, operational pipeline infrastructure spanned a total length of 16,770 km. This network has a combined design capacity of 369 million metric standard cubic metres per day (mmscmd). The gas transportation segment is dominated by a few major players at present. The market’s leading operator is GAIL Gas Limited, which accounts for 68 per cent of the total operational pipeline network and 62 per cent of the transmission capacity. The other big players are Gujarat State Petronet Limited (GSPL) and Reliance Gas Transportation Infrastructure Limited (RGTIL). Together, GAIL Gas, GSPL and RGTIL own and operate 94 per cent of the total pipeline network and 97 per cent of the total transmission capacity in the sector.
GAIL Gas also operates the longest natural gas pipeline in the country, the 4,554 km Hazira-Vijaipur-Jagdishpur pipeline, which has a design capacity of 53 mmscmd. Meanwhile, RGTIL operates the largest pipeline in terms of design capacity, the 80 mmscmd East-West gas pipeline. This pipeline is also one of the country’s longest pipelines, spanning 1,480 km.
Several gas operators are currently also involved in the development of new pipeline infrastructure. As on April 1, 2018, about 11,377 km of natural gas pipelines were under construction. In terms of length, the 2,539 km Jagdishpur-Haldia-Bokaro-Dhamra pipeline project being implemented by GAIL India tops the list. Capacity-wise, AP Gas’s Kakinada-Visakhapatnam-Srikakulam project entails the maximum design capacity of 90 mmscmd.
Though the government has laid out an ambitious plan to double the pipeline network and pipeline companies have obtained authorisation for a number of pipelines from the Petroleum and Natural Gas Regulatory Board (PNGRB), the progress on construction of these pipelines has been slow. Only the Kochi-Kottanad-Bengaluru-Mangaluru pipeline has shown some progress (of the total length of 1,056 km, 240 km has been laid). All the other pipelines have shown very little progress or no progress at all, as on April 1, 2018. The pipeline on which there has been some progress in recent months is the Jagdishpur-Haldia Bokaro-Dhamra pipeline, driven by the government’s thrust on setting up city gas networks in a number of cities along the pipeline.
With regard to petroleum product pipelines, the government recently conducted the ground-breaking ceremony of the India-Nepal petroleum product pipeline from Motihari to Amlekhgunj. Of the total length, 32.7 km will be laid in Indian territory while 36.2 km will be laid in Nepal. Work is likely to be completed by March 2019.
Plans on the anvil
State-owned oil companies Indian Oil Corporation Limited, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited are planning to raise gas contributions to between 5 per cent and 15 per cent of their incomes over the next few years, up from nearly none now. This is in line with the government’s target to raise the share of natural gas in the country’s primary energy mix to 15 per cent by 2030, from the present 6.5 per cent. The state oil companies’ plans involve building liquefied natural gas (LNG) import terminals and domestic pipelines, and bidding to set up urban gas networks across potential demand centres, particularly in the eastern part of the country.
At the same time, three transnational pipelines are also on the anvil. These comprise the India-Russia pipeline (spanning about 6,000 km), the Iran-Pakistan-India pipeline (2,700 km, 30 mmscmd) and the Kanai Chatta-Shrirampur pipeline (275 km, 7.2 mmscmd). These projects are expected to entail a total investment of $32.2 billion.
India needs to invest an estimated $100 billion in natural gas infrastructure by 2022, including the setting up of a gas grid across 228 cities. A major chunk of this investment will come from state oil companies. Given the challenges faced by LNG terminal investors in tying up demand for LNG in the country, laying transnational pipelines is a major challenge because of the huge investment involved and the price competition in the Indian gas market. However, with a number of domestic gas pipelines at various stages of implementation and the expansion of city gas networks, natural gas infrastructure will witness significant development in the near future.