India is the third largest primary energy consumer in the world after China and the US. With its growing population and urbanisation there will be a growing need for affordable energy in the country. The primary energy basket in India is dominated by two commodities, oil and coal, which cover nearly 86 per cent of this basket. At present, the share of gas in India’s energy mix stands at 6.7 per cent or 60 billion cubic metres (bcm). The country aims to increase its gas share in the primary energy mix to 15 per cent or 180 bcm by 2030.
In the overall global markets, India is 13th in terms of consumption of gas. There is a lot of scope for improving the country’s gas infrastructure, as the domestically produced gas is not available in many parts of the country. The consumption pattern has shown increasing acceptance of liquefied natural gas (LNG) and dominance of anchor sectors, namely, fertilisers, followed by power and city gas distribution (CGD).
Many initiatives and structural reforms have been undertaken by the government to push the country’s growth towards a gas-based economy. The key reforms that have been undertaken to improve the gas infrastructure include completion of the national gas grid and the northeast gas grid, approval of a capital grant for the Jagdishpur-Haldia/Bokaro-Dhamra natural gas pipeline, construction of new LNG import facilities, and development of CGD networks.
Progress on gas pipeline infrastructure
The gas pipeline infrastructure is an economical and safe method of transporting natural gas by connecting gas sources to gas consuming markets. The “One Nation-One Grid” idea refers to the integration of the country’s regional grids, thus establishing a national grid for providing energy produced from natural gas to various stakeholders. It is focused on the expansion of the gas pipeline network from the current 18,700 km to 35,000 km. Of the 18,700 km, 74 per cent of operational pipelines have been built by GAIL (India) Limited. The National Gas Grid has been envisaged to ensure adequate availability and equitable distribution of natural gas in all parts of the country. This will be the backbone of the pipeline infrastructure that will cater to the various segments that consume natural gas in the country. GAIL is constructing a total of 5,838 km of the upcoming gas pipeline. It is expected that these pipelines will be commissioned over the course of the next two years, and will be completed by 2023.
Some of the key challenges faced by the sector in project implementation are:
- Delays in right-of-way acquisition due to non-availability of land records in certain states,
- Resistance from landowners/farmers in some parts of the country
- Landowners seeking exorbitantly high prices for land/plots.
The progress of projects was also impacted by the outbreak of the pandemic.
The road ahead
India’s economic growth is closely related to its energy demand. Therefore, the need for oil and gas is projected to grow even further, making the sector conducive to investment. Investments to the tune of approximately $60 billion have been envisaged in the coming five to six years. These investment opportunities will be offered by the development of gas pipeline infrastructure and the CGD network, growth of retail LNG and transport, re-gas integration, development of LNG storage, rise of ancillary manufacturing, the Sustainable Alternative Towards Affordable Transportation scheme, and asset monetisation.
Based on inputs from Ashu Singhal, Executive Director (CSPA, RM & TQM), GAIL (India) Limited