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How India is gravitating towards a gas ecosystem
India has been a predominantly fuel economy. The country’s current energy mix is characterized by low domestic production, high dependence on coal imports, and growing use of natural gas along with renewable energy for electricity. In 2020, the country imported crude oil worth $59 billion, which is, by far, the largest item of its total import bill.
Natural gas is an essential energy source in many parts of the world because it emits almost 50% less carbon dioxide than other forms like coal or diesel when burned for power generation or vehicles, respectively. Thus, making it more environmentally friendly than conventional sources such as diesel or coal-fired thermal plants used across sectors. The country is now rapidly moving towards a gas-based economy. This shift will lead to greater competition, enhanced flexibility and transparency, modern and improved processes, ease of doing business, and investor confidence. Such measures will also encourage import substitution through local manufacturing by MSMEs. In such a scenario, where India is moving towards becoming an exporter of energy sources such as crude oil and natural gas, it will become an important stepping stone towards the vision of ‘Make in India.’
The recent changes in the Petroleum and Natural Gas Regulatory Board Act
The Petroleum and Natural Gas Regulatory Board Act initiatives have increased private players’ participation in natural gas. The government has developed policy guidelines for onshore and offshore exploration, production, and testing under the New Exploration and Licensing Policy (NELP) Blocks.
• The revenue sharing model adopted by the government has helped monetize marginal fields of National Oil Companies (NoCs) under Discovered Small Fields (DSF) Policy, with policy for grant of extensions to medium fields.
• The policies for uniform licensing in hydrocarbon exploration and marketing freedom for gas produced from deep water are significant steps towards a sustainable future.
• Significant progress has been made in operationalizing stranded R-LNG power plants and developing gas-consuming markets for a cheap supply of raw materials such as fertilizers to the farmers.
• In a rare scenario, the government has also decided to give a capital grant as VGF to GAIL for pipeline infrastructure development. This will help connect the eastern parts of India with the National Gas Grid.These reforms come as a part of the series of new policy initiatives such as LPG cylinders subsidy, EoI to procure Compressed Bio Gas (CBG), and the recently announced policy for exploration of coal bed methane resources to leverage India’s potential. Consequently, India’s primary energy mix is expected to comprise approximately 15% natural gas by 2030, as per “Vision 2030: Natural Gas Infrastructure in India” of the Petroleum & Natural Gas Regulatory Board.
The greater economic impact of the shift
The government has been trying to make the economy more efficient, reduce India’s dependence on fossil fuels, prevent pollution, and increase employment opportunities. Import substitution and job creation are some of the significant benefits that would be derived from a move toward natural gas as an alternate fuel source, the share of which has averaged 6% of India’s total primary energy supply (TPES) in the last decade. Natural gas is being adopted rapidly by sectors for power generation, especially heavy industries like steel production, because it’s cheaper than diesel and can be used in industrial processes incompatible with the fuel. India is aiming to be self-sufficient in energy products, in addition, to becoming a net exporter of other commodities.
Final thoughts
India’s natural gas Exploration and Production (E&P) industry has evolved phenomenally since the 2000s, with the capacity to trap reserves up to 3 km below sea level. The government has also approved 100% FDI in the E&P efforts. With the government trying to make the process of bidding and marketing for natural gas more transparent and accessible, it is a matter of time before India completely shifts towards a gas ecosystem.
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