LNG Infrastructure needs shot in the arm
A drop in domestic natural gas production has resulted in a rise in liquefied natural gas (LNG) imports in 2016 and 2017, and is expected to continue through 2018, according to top officials in the Ministry of Oil and Gas.These global trends have also affected India’s natural gas consumption. “To date India has not been able to create an expansivegas infrastructure across the country, in part due to lack of funding and difficulties in pipeline siting and land acquisition,” said Alireza Moghadam, Chairman AMIDT Group, told Express recently.
Last year, the Ministry of Petroleum & Natural Gas (MoP&NG) had kicked off an initiative to explore the possibility of usage of LNG as a transportation fuel in the road transport sector. According industry observers, gas accounts for only 5 per cent of the primary energy demand in India, opening up a huge opportunity for expansion. “…strong economic growth leads to higher utilisation of gas based power capacities and increased use in industry, led by fertilisers,” observed Raghav Mrudul, an independent research analyst.This is expected drive gas demand use to almost 80 billion cubic metres (bcm) by 2022 from 55 bcm in 2016.
However, Moghadam points to India’s domestic gas production, which has been declining since 2012 ‑ in part due to lack of investment in the upstream sector. This is partly due to a government administered natural gas pricing system that does incentivize upstream investment. 40 per cent of India’s gas pipeline and distribution infrastructure is concentrated in the two western states of Gujarat and Maharashtra.
But officials in the Oil and Gas ministry say that the government has taken into account all the issues. Share of natural gas in India’s energy mix is poised to grow from 6.5 per cent currently to 15 per cent by 2020-21, an official in Oil and Gas Ministry said. To achieve this, however, India needs to more than double its current LNG import capacity of 25 million metric tons per annum and expand associated infrastructure.