Hard to imagine gas-led economy based only on domestic supply: PNGRB Chief

The domestic natural gas industry needs to take a holistic view of the sector to raise natural gas consumption in the country and meet demand when it reaches a critical level, the Petroleum and Natural Gas Regulatory Board (PNGRB) Chairperson Anil K Jain said on Monday. Arguing that enough natural gas is available for import, he said the domestic market in India needs to amalgamate.

Speaking at the India Gas Infrastructure Conference organised by industry body Ficci, Jain said it will be difficult to imagine a gas-led energy system for India based on only domestic gas. "As it is, the demand for gas in India is going to grow so much, it has to become like Angola or Qatar (in terms of capacity and usage). That kind of gas will not come from domestic sources," he stressed.

The government wants to raise the share of gas in its energy consumption mix to 15 per cent by 2030, up from the current 6 per cent. The country currently imports about 50 per cent of its gas requirements. India's energy demand is rising 4-5 per cent annually.

"When India can import almost 86 per cent of its oil demand at Brent price, why can't an imported gas-based regime be developed," he said.

Asserting that the dichotomy between domestic and imported gas has to go, Jain said a perceived difference between natural gas sourced domestically vis-a-vis imported Liquified Natural Gas (LNG) is also splitting the market. "Within domestic gas, it has split the market between Administrative Price Mechanism (APM) gas and legacy fields. The City Gas Distribution (CGD) segment has split from industry, and agricultural urea markets. Within CGD, it has split transport and cooking versus industry and commercial," he said.

LNG vs domestic gas

Natural gas is shipped in its liquid form as LNG to LNG terminals. Regasification is the process of converting the LNG back to it's gaseous state by heating it, after which it is transported through pipelines.

"With 45 million tonnes of re-gas capacity at the terminals, and only 25 million tonnes or so coming through it, this is an opportunity. The LNG business has to integrate with the overall gas business," Jain added.

Capacity utilisation has, however, been an issue at the terminals. Akshay Kumar Singh, Managing Director and Chief Executive Officer of India’s largest LNG importer, Petronet LNG, had pointed out in May that India's overall capacity utilisation stood at an average 60 per cent. This was however, higher than average international capacity utilisation of 40 per cent.

The mix of APM gas and market price-linked gas in the country is now at 89 per cent versus 11 per cent. "This 89 per cent share of cheap gas in the CGD segment will keep on coming down. The share of APM gas is not going to increase," Jain said.

Investments in city gas

Jain said the government expects good response for the upcoming bidding of license areas for both pipelines and CGD. "I am hopeful that for the remainder of pipelines (Jammu-Srinagar) and for the remaining CGD areas in the Northeast, Hilly District and Jammu & Kashmir, there will be a good response," he said.

About 96 per cent of the country has already come under CGD licensing. PNGRB has begun public consultation for the proposed pipeline in Jammu & Kashmir and sought comments from all stakeholders within a month on the route as well as carrying capacity.

Jain said the country will need to see a second wave of investments into the building of infrastructure for the remaining two sectors where CGD is yet to penetrate - commercial and large industry.