India is one of the largest primary energy consuming countries in the world. At present, its primary energy basket is dominated by coal and oil. However, the government envisions increasing the share of gas in its primary energy mix from 6.2 per cent to 15 per cent by 2030. As a result, consumption of gas is expected to increase about 2.5 times. However, there are several factors hampering the growth of the gas sector such as low pipeline utilisation, less domestic production, low returns to pipeline network developers, additive tariff mechanism across transmission systems and other regulatory challenges. In a bid to resolve these issues and to attract greater investment in the sector, the government has taken several key measures in the past few months such as issue of draft regulations to ease liquified natural gas (LNG) distribution. At a recent India Infrastructure conference, TarunKapoor, secretary, Ministry of Petroleum and Natural Gas (MoPNG), spoke about the key focus areas, and plans to give a boost to the gas sector and provide regulatory relief to stakeholders…
On the production front, India produces only about 45 per cent of its domestic requirement of gas while the rest is met through imports. To that end, the MoPNG is looking at ways to increase domestic production to meet 100 per cent of the gas requirements. Besides, it aims to increase the demand of gas in the country. The sectors which are expected to increase gas uptake in the short run are refineries, power and city gas distribution (CGD). The power sector and refineries can immediately switch to the use of natural gas instead of other fuel sources. Besides, the Petroleum and Natural Gas Regulatory Board (PNGRB) has already allotted 228 geographical areas (GAs) under 10 rounds of bidding to expand the CGD network to cover 53 per cent of the geographic area. It will promote the use of gas for industrial, commercial, domestic as well as transportation purposes. The three sectors are expected to substantially increase gas demand. Moreover, there lie huge growth possibilities for gas production through coal bed methane and compressed biogas. The government had bid out a large number of fields to the private sector for the extraction of coal bed methane. However, some have not taken off. Therefore, the ministry is now looking at ways of encouraging more participation.
The MoPNG plans to push the use of gas in the industrial and transport segments using compressed natural gas (CNG) and LNG. The PNGRB has issued a draft regulation to allow other parties that are eligible to engage in the marketing or distribution of gas where exclusivity is over. This will also provide flexibility to consumers to pick the operator of their choice.
Besides, the PNGRB has issued draft regulations for operating gas exchanges in the country with the aim of improving market access and promoting a free gas market. These recent measures have reiterated the government’s commitment towards increasing the share of gas in the energy mix and promoting the use of cleaner fuels in the future.
Going forward, the ministry is considering policy and regulatory measures to promote free trading, ensure easier transportation and curb monopolies on gas transportation. It is also looking at providing greater regulatory clarity for GAs wherein exclusive marketing licences to specific companies have expired, so that new sellers can enter these markets and benefit consumers.
It is also working on promoting the marketing of gas for producers that currently have a limited customer base. Therefore, the MoPNG believes that players such as GAIL (India) Limited, the largest gas trader in the country, should take the lead and build the confidence of other players in the market.