Indian government vision towards a gas-based economy

Sylvie Cornot-Gandolphe's picture
Sylvie Cornot-Gandolphe, Research Associate & Energy Consultant, CEDIGAZ
Comments: 0

Cedigaz’s report “India’s vision to a gas-based economy: drivers and challenges” - India’s natural gas supply and demand outlook is changing. The Government of India (GoI) wants to make India a gas-based economy ‘by boosting domestic production and buying cheap LNG’. India has set a target to raise the share of gas in its primary energy mix to 15% by 2022, although the timing is uncertain.

According to the Ministry of Petroleum and Natural Gas (MoPNG), moving to the level of 15% would mean that annual gas consumption would increase from about 50 bcm to above 200 bcm in the future. This would require adequate availability of natural gas through domestic production as well as imports, adequate investments in pipeline, LNG import terminals and CGD infrastructure and even financial support in the form of incentives.

To improve the share of natural gas and promote a gas-based and clean fuel economy, the GoI has adopted a systematic approach to focus on all aspects of the gas sector:

  • Development of gas sources either through domestic gas exploration & production (E&P) activities or through building up facilities to import natural gas in the form of LNG
  • Development of adequate gas pipeline infrastructure including nationwide gas grid and CGD network 
  • Development of gas consuming markets including fertilizer, power, transport and industries

Some important specific initiatives taken to enhance the domestic natural gas production, expand the gas pipelines and secondary infrastructure and develop the gas consuming markets are as under:

• 100% Foreign Direct Investment (FDI) in many segments of the hydrocarbon sector.

• Notification of a new Hydrocarbon and Exploration Licensing Policy (HELP) on 30 March 2016

• Adoption of a Discovered Small Fields (DSF) policy to offer to global investors discovered small fields of Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL), which had not been put into production by these companies. Under the DSF policy, the government has awarded 31 contracts (23 onshore and 8 offshore) in the DSF Bid Round of 2016.

• Linkage of gas prices to the market/important hub prices under the New Domestic Natural Gas Price Guidelines of 2014.

• Marketing and pricing freedom for new gas production from Deepwater, Ultra Deepwater and High Pressure-High Temperature areas, subject to certain conditions.

• Marketing and pricing freedom for gas produced from Coal Bed Methane (CBM) fields to incentivize CBM operations in the country.

• A capital grant of 40% for development of 2,650 km-long Jagdishpur-Haldia & Bokaro-Dhamra natural gas pipeline to ensure supply of natural gas to eastern India.

• Reduction of basic customs duty on LNG from 5% to 2.5% in the 2017 federal budget to boost LNG demand in industrial and commercial sectors, especially power, petrochemical, fertilizer and CGD, and also help in reviving stranded capacity of power and fertilizers plants.

• Gas pooling mechanism for fertilizer sector to encourage utilisation of fertilizer units in the country.

• Priority for allocation of domestic gas accorded to Piped Natural Gas (PNG)/Compressed Natural Gas (CNG) segments to meet 100% of their demand and faster roll out of PNG connections and CNG stations to promote the use of natural gas in the transport sector, households and small industries.

This is what the Government of India is committed to do to make India a gas-based economy. To read more about Cedigaz’s report “India’s vision to a gas-based economy: drivers and challenges” click here.

The report analyses gas demand trends in India by 2025-30 and draws on two reports recently published by the Oxford Institute for Energy Studies (OIES) and the Bureau of Economic Geology (BEG)/Centre for Energy Economics (CEE), University of Texas

Share your insights and join the conversation: Where do you see the India's natural gas market in the next 5 years? Leave your comment below. 

Gastech 2018 call for papers is now live. For a chance to speak at the conference next year, submit your abstract today.