India and its energy dependence cannot be undermined. The world’s second largest nation in population index and third largest in energy consumption, India relies greatly on energy for growth and progress. The past year’s total energy consumption alone was recorded at 753 million tonnes of oil equivalent (MTOE). The numbers beat the likes of Central and South America. When we go back and capture the decade long statistics between 2006 and 2016, the nation’s energy consumption was higher than that of China’s (5.7% against 4.4%)
Energy Scarcity limits Prosperity
India’s energy mix constitutes coal and oil, each in the percent composition of 57 and 29. On the other hand, natural gas which is the cleanest fossil fuel attributes to 6 percent in the mix, pitted at the world average of 24%. Energy by itself has always been a key parameter for country’s socio economic health. Researchers by large have ascertained that energy’s scarcity limits prosperity.
Understanding the importance of the very same, Prime Minister Narendra Modi has been relentlessly focusing on environment while working to arrive at carbon neutral economy. The country’s Intended Nationally Determined Contribution (INDC) aims at successful reduction in carbon by at least 33 to 35 percent of GDP by the year 2030. This puts natural gas on top of the bucket list of many important accomplishments for India.
Expansion of Natural Gas
The Central Govt aspires to expand the percentage of natural gas from 6 to 15 by the year 2022, and to 20 by the year 2030. This kind of increase will automatically transcend top down, with a significant multiplier effect on the oil and gas value chain impacting industries and the nation’s infrastructure.
Coming to MTOE, India’s energy consumption is estimated to touch 940 MTOE by 2022 going by the prevailing economic growth rate. The demand for natural gas will automatically rise to 141 MTOE in the process, making it threefold of what was in 2017.
Low output from Krishna-Godavari basin
The country’s natural gas production was 32.6 BCM in the year 2017-18 as what was at 52 BCM in the year 2010-11. The reduction can be attributed to slowing production from the Krishna -Godavari basin, the region that was predicted to give a massive
boost to India’s gas industry in totality. This has actually brought down the morale of various entities like producers, consuming industries, government and pipeline infrastructure developers. Low volume further leads to under utilization of several cross country pipelines like East West Pipeline which has an original capacity utilization of 21 percent.
Direct Impact on LNGs
Constrained availability of domestic gas resources remains a huge challenge for creating a meaningful penetration in the country. This also affects the role of imported liquefied natural gas (LNG) while trying to meet the growing demand. Over 45 percent of transported natural gas through the pipelines was actually regasified LNG in the years 2017 and 18. Major LNG destinations like Australia, USA, Russia have now been added to the country’s sourcing list apart from Qatar. This becomes a sweetheart deal especially with Brent Crude trading above $84 per barrel as compared to what was $49.52 per barrel two years ago.
An unbeatable force
There is an untiring effort ongoing from the Center’s end to improve on domestic gas production. Despite the fact that things are on a slump, it goes without saying that high production of natural gas is an unbeatable force to counter surging import and trade deficit. Policy making has been consistent to create impact. The Government of India has monetized production from deep water and high pressure gas fields effective April 2016 with the mission to attract investments and double the gas produce. Even the discovered small fields are being prepped for production while scouting for new fields on the other hand.
91 Gas Distribution Networks
The 9th round of bidding for 86 geographical areas (GA) will automatically increase the demand for natural gas. There are 91 city gas distribution networks in India so far. Post bidding, thousands of commercial consumers and industry will have access to natural gas.