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Published:Monday, April 08, 2019 1:23 PM

India’s Ambitious Target of Achieving 15% of Natural Gas in Energy Mix by 2030

India’s Ambitious Target of Achieving 15% of Natural Gas in Energy Mix by 2030

On 22nd November 2018, during the launch of 10th City Gas Distribution (CGD) bidding round, Hon’ble Prime Minister Narendra Modi made a bold statement regarding the consumption of natural gas in India. With emphasis on making India a “Gas Based Economy”, he added, India’s gas consumption should increase by 2.5 times by 2030 as the country would have more than 10,000 CNG retail outlets & 40 Million PNG connections.
Present energy mix of India
Present energy mix of India includes only 6.18% share of natural gas. To achieve 15% of share of natural gas in energy mix, India needs to increase its current gas consumption from 51.72 BCM to 134.83 BCM by 2030 considering around 0.6% increase in energy requirement year-on-year basis.
This growth in consumption could be driven by expanding city gas distribution networks, fertilizer industry, and ensuring affordable gas supply to stranded gas power plants in future course of time.
Current Status of Natural Gas in India
Sector wise Demand & Supply of Natural Gas in India (2017-18)
Major sectors in India accounting for most of the demand for natural gas are fertilizer (Urea) plants, refineries, gas-based power plants & CGD networks. After looking at the current natural gas supply scenario in India, we can conclude that the demand and supply deficit of natural gas is huge in major sectors which is hampering the vision of attaining 15% of share in country’s energy mix by 2030.
Indicators & Opportunities for Making India a Gas Based Economy:
A.   Fertilizer Industry
Assuming fertilizers plants running at their 100% capacity utilization, currently around 113 MMSCMD natural gas would be required by them. Apparently, in 2017-18, total gas supplied to Fertilizer industry was around 38.57 MMSCM. Fertilizer industry enjoys subsidy from the government of India to keep fertilizer prices under control. For running fertilizer plants on enhanced capacities, it would compel the government to bear huge subsidy burden in upcoming time or to increase supply of cheap domestic gas to fertilizer industry to mitigate subsidy expanses.
After considering factors of capacity utilization, gas availability, and gas affordability it is calculated that around 24.2 MMSCMD of natural gas would be required to run fertilizer plants on 70% of their capacity.
B.    Gas-based Power Plant
In India there are 31 gas-based power plants, having total installed capacity of around 24 GW. 225 MMSCMD of natural gas supply is ideally required by these gas-based power plants against which these are only getting around 32.7 MMSCMD of natural gas supply owing to gas unavailability & un-affordability of imported R-LNG. This is the main reason for the stranded 14.5 GW of gas-based power plants in India.
After considering factors of PLF, gas availability & gas affordability, PPA availability, it is concluded that at least 112.5 MMSCMD of natural gas would be required to run gas-based power plants on 50% capacity.
C.    Refineries
Refineries requires natural gas as a fuel for heating source. Currently around 72 MMSCMD of natural gas is required by the refining sector in India which has current installed capacity of around 250 MMTPA. Considering upcoming under construction & proposed refineries to be commissioned till 2030 there would be additional natural gas requirement of 40.23 MMSCM, thus in totality refineries would require 112.23 MMSCMD of natural gas if operated on their 100% installed capacity.
After considering factors like capacity utilization, gas availability & gas affordability, it is observed that around 89.78 MMSCMD of natural gas would be required by refineries if operated on their 80% installed capacity
D.    City Gas Distribution Networks
During pre-PNGRB era i.e. 2006, CGD network was established in 35 geographical areas, and in between CGD bidding round 1 to 8, around 56 geographical areas are covered by CGD network. Recently concluded 9th & 10th CGD bidding rounds proposes to cover 84 & 50 geographical areas respectively. Timeline for establishing CGD networks in the proposed GA’s is before 2030, thus these newly proposed CGD networks would consume additional natural gas with respect to current consumption of natural gas.
Currently India’s established CGD network consumes around 25.38 MMSCMD of natural gas. It is observed that additional 131.6 MMSCMD of natural gas would be required by the GA’s proposed under 9th & 10th Bidding Rounds. Thus by 2030, total gas required by the GA’s would be around 156.98 MMSCMD, also currently CGD is top most priority for natural gas allocation in India. 133.43 MMSCMD of natural gas would be required by CGD network assuming if only 85% of the proposed GA’s would be covered under CGD rounds by 2030.
By considering realistic scenarios, by 2030, around 359.91 MMSCMD gas OR 131.36 BCM of gas per year could be consumed, which is almost close to the target of 134.83 BCM.
E.     Domestic production of natural gas
In 2017-18, 35 BCM of gas was produced through various fields of ONGC, OIL & other private players. By 2022, as per DHG, natural gas production would be doubled giving boost to domestic natural gas production. This would also reduce the imports of natural gas to certain extent.
Thus by 2021-22, domestic natural gas production in India could be approx. 72 BCM.
F.      LNG Terminals
Currently, LNG is imported via LNG terminals in India and no transnational pipelines are into existence till now despite efforts made by the government. Existing capacity of LNG terminal in India is 31.7 MTPA owing to recent commissioning of Ennore terminal. It is observed that after completion and commissioning of the proposed and under-construction LNG terminals in India, total LNG handling capacity of the country could be increased to 80.7 MTPA i.e. India could import 90 BCM of gas, which would provide the big boost to natural gas supply capabilities within the countries provided the cost control of imported LNG.
Thus, India could achieve supply of almost 162 BCM of Natural gas by 2030.
Thus, we conclude that India’s target to achieve 15% natural gas in energy mix is quite possible if above proposed scenarios are truly considered & executed by the authorities in India. Realistic scenarios considered are based on India’s slow pace of Infrastructure growth & unfavorable government policies & regulations limiting the development of gas sector.
Key Take Aways
15% share of natural gas in energy mix is possible, if minimum gas consumption of 135 BCM is fulfilled in the country. India needs to increase domestic production by harnessing advanced technologies in age old fields to maximize production, conducting aggressive exploration programs for new oil & gas discoveries, simplification of regulations, affordable pricing of natural gas for all sectors, and by increasing imports of natural gas by enabling infrastructure development of LNG terminals and gas transmission pipelines within the country. Price parity of natural gas with respect to crude oil should be considered by the government, which could make gas availability more affordable for consumers. Government should also consider provision of providing subsidies if at all necessary, for achieving ambitious target. 

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