Debottlenecking India’s gas infrastructure is key to the nation increasing its use of the fuel and existing plans will require investments of at least $12 billion in new capital, according to Prabhat Singh, chief executive of Petronet LNG.
Gas today only accounts for some 6% of India’s primary energy mix, although the figure is around 25% in the western state of Gujarat that hosts the Hazira and Dahej liquefied natural gas terminals.
The nation today imports more than 50% of its gas, although at a current price of $3.6 to$3.7 per million British thermal units, it is not competitive with all other fuels.
Making that gas more affordable and getting more customers hooked up requires a three-pronged debottlenecking exercise, Singh told the Gastech virtual conference on Tuesday.
The three components requiring attention — quickly — are the national gas grid, city gas networks and LNG regasification facilities.
India has between 16,000 and 17,000 kilometres of gas pipelines with combined capacity of more than 400 billion cubic metres, although they only transport 165 to 170 Bcm, he noted.
Huge investments needed
For gas to make greater inroads across the South Asian nation, a further 15,000 kilometres of pipelines is needed at a total estimated cost of $8 billion.
In addition, $4 billion-worth of investments is required to add new LNG receiving and regasification terminals.
As many as 19 LNG import projects are already planned or under construction and a further 10 could come in future, he said.
The nation’s existing LNG terminals have combined capacity of 42 million tonnes per annum, although current consumption is just 23 million tpa, said Singh.
Increasing utilisation of LNG in India depends both on price and improving the gas distribution network.
India’s west coast market is “very well poised” to absorb LNG at the prevailing spot price of $2 to $3 per million Btu and even at $5 per million Btu in coming years, he told delegates attending the virtual event organised by DMG.
India recently held two city gas bidding rounds, which generated commitments totalling $16 billion over the next five to eight years to improve connectivity.
The companies involved will be penalised if they do not deliver as pledged, said Singh.
Looking to the future, Singh added that India would play “a major role” in global LNG demand growth.
“It’s a very lucrative market,” he said.