Natural gas and renewables have gained significant traction as alternative sources of energy in the past few years. Countries have made a concerted effort to increase the share of these alternative sources in their primary energy mix. In 2017, global primary energy consumption grew strongly, and was led by natural gas and renewables. India and China, with a share of 6 per cent each in global natural gas consumption in 2017, have taken several initiatives for diversifying their primary energy mix. In the coming years, as the government pursues the COP21 commitments, the role of gas within the overall primary energy basket will only increase.
Over the past decade or so, natural gas consumption in India has grown in the range of 6-7 per cent per annum. However, production has not kept pace with the rising consumption, resulting in increased imports of liquefied natural gas (LNG). While LNG imports began in 2003-04, their share in total consumption rose to 51 per cent in 2017-18. According to GAIL (India) Limited estimates, demand for natural gas is poised to grow at a compound annual growth rate of 8 per cent during the period 2018-19 to 2021-22.
In terms of pipeline infrastructure, at present there exists a trunk pipeline network of 16,895 km across the country. Of the total, 11,410 km (67.53 per cent) is owned by GAIL. This is followed by Gujarat State Petronet Limited which owns about 2,500 km (15 per cent) of the pipeline network. In addition, about 13,000 km of pipelines are under construction, of which five pipeline projects spanning a total length of 5,300 km are being developed by GAIL.
The country has four regasification terminals, at Dahej, Hazira, Dabhol and Kochi, with a total capacity of 26.5 million tonnes per annum (mtpa). There are also five under-construction LNG terminals with a total capacity of 21.5 mtpa,at Mundra, Jaigarh, Ennore and Dhamra, and two terminals that have been planned at Chhara (5 mtpa) and Kakinada (3 mtpa).
The city gas distribution (CGD) segment accounted for 23 million metric standard cubic metres per day of the natural gas consumption in 2017-18, representing about 17 per cent of the total consumption. Excluding the ninth bidding round, GAIL is engaged in 50 joint ventures and has one subsidiary through which it has a presence in about 50 geographical areas.
The way forward
The key objectives of the government’s COP21 nationally determined contributions include reduction in carbon emissions intensity of its GDP by 35 per cent by 2030, 40 per cent of the energy to be sourced from non-fossil fuels by 2030, and creation of an additional carbon sink of 2.5-3 billion tonnes of carbon dioxide equivalent. In order to meet these commitments, investments worth at least Rs 2 trillion will be required. Besides, the changing environment offers new opportunities in the gas sector. With the growth in renewables, gas-based power can be utilised for balancing the electricity grid. To this end, hybrid power models can be explored. The outlook for the Indian gas sector is very robust, driven by strong domestic demand, expansion of the pipeline network, and development of LNG terminals and CGD infrastructure. However, issues related to low pipeline utilisation, huge coal-based capacity addition in the power sector, non-competitive price of gas vis-à-vis polluting fuels such as fuel coke and pet coke, and the exclusion of natural gas from the ambit of the goods and services tax need urgent government attention.
Based on a presentation by Rajeev Mathur, Executive Director, Corporate Affairs, and OSD to Chairman, GAIL (India) Limited, at a recent India Infrastructure conference