India’s proven natural gas reserves is 1.3 trillion cubic metres (TCM), which is 0.7% of the total global reserves (188 TCM).Going by the current production rate, India’s natural gas reserve could last for at least 56 years.
Natural Gas (NG) – a bridge fuel, helps transitioning from conventional fossil fuels i.e., coal and petroleum products like petrol and diesel to renewable energy sources like solar, wind energy, and green hydrogen, etc. India’s proven natural gas reserves is 1.3 trillion cubic metres (TCM), which is 0.7 Percent of the total global reserves (188 TCM).Going by the current production rate, India’s natural gas reserve could last for at least 56 years. During 2012-22, India’s domestic natural gas consumption, production, and LNG (Liquefied Natural Gas) import averaged 54.8 billion cubic meters (BCM), 28.8 BCM, and 26.1 BCM, respectively. During the said period, India’s average import dependency stood at 47.5 Percent.
India’s share of NG in the primary energy basket hovers around 5.5-7 Percent . Government targets to increase the share of NG in primary energy basket to 15 Percent by 2030. Despite introduction of proactive measures such as Hydrocarbon Exploration and Licensing Policy and domestic NG price revision, the domestic NG production remains insufficient to meet the rising demand. Therefore, dependency on imported LNG keeps increasing. India currently has 7 operational LNG terminals with total cumulative LNG handling capacity of 49 million tons per annum (MMTPA).
The Dahej terminal (17.5 MMTPA) is the largest terminal with capacity utilization of 95.5 Percent in 2023-24. On the contrary, the Petronet LNG’s Kochi terminal (5 MMTPA) has been underutilized with capacity utilization of 20.8 Percent in 2023-24. Considering load on Dahej LNG, it is under expansion up to 22.5 MMTPA. The other LNG terminal like Hazira (5 MMTPA), Mundra (5 MMTPA), Ratnagiri (5 MMTPA), Ennore (5 MMTPA), and Dhamra (6.5 MMTPA) are not fully utilized. India is banking big on LNG, constructing new LNG receiving and regasification terminals and expanding the existing ones. Taking into account the existing LNG facility, NG pipeline infrastructure, and acceptance of CNG as a transport fuel, demand for re-gasified LNG would continue to rise.
The Petroleum and Natural Gas Regulatory Board (PNGRB) has taken the bull by its horn to expand the NG market. PNGRB has already authorised 307 City Gas Distribution networks across the country. To enable smooth flow and distribution of natural gas through national gas grid, PNGRB has also authorized NG pipelines network of 33,475 KM, which includes 31,903 KM of common carrier, 792 KM of tie in connectivity, and 780 KM of dedicated pipelines.
National gas grid network connecting demand and supply centres across the country offers opportunities for inclusive growth. Extensive NG infrastructure enables new industries and transport sector to explore and adopt NG as a sustainable and viable fuel. Green hydrogen makes a business case for its adoption in multiple industries and transport sector, but high price of green hydrogen and infrastructure bottle necks still make NG a fit candidate for bridging the gap.
For example, the NG based urea plants strongly advocate to stay on course to use NG in production process. NG is not only economical but also convenient for the urea manufacturers. Carbon dioxide which is a key component is urea manufacturing, is easier to produce and use through NG route compared to the green hydrogen route. Therefore, these 25 gas-based urea plants are more likely to use NG for urea production.
As we observe that there has been an imminent focus of the Indian government to push usage of natural gas across major industries. While 30 Percent of the gas in India is currently used in fertilizer industries, mainly due to subsidies being provided to the urea producers, recent growth in CGD authorizations has also led to it becoming the second largest sector using gas. All this rising consumption in vehicular movement and domestic PNG connections contribute to rise of demand of natural gas in India, which is ultimately being met by imported LNG.
The Ministry of Petroleum and Natural Gas encourages the conversion of one-third of the existing long-haul trucks to LNG from diesel. This shift would boost the share of natural gas in the energy mix to 15 Percent by 2030 and reduce emissions. While natural gas emissions are significantly lower than diesel, it must be noted that the imported LNG shall have a significant bearing on environment as well.
While LNG can play a role in the transition to a low-carbon future, it's crucial to balance its use with efforts to promote renewable energy and improve energy efficiency. Balancing these impacts with a move towards more renewable energy sources is crucial for sustainable energy planning. One such approach would be to mix biogas or hydrogen, which can be produced reliably in India, in the natural gas stream. This is also an area of focus of the government as it has devised a plan for CBG-CGD synchronization. This move will not only reduce the dependency on import of fuels, but will also help Indian farmers, and at the same time address pollution issues in many areas. Natural Gas has a big role to play in India’s energy transition.