India has been focusing on the diversification of energy sources over the last decade. The focus on gas is part of the wider diversification policy. India’s rapid urbanisation and industrialisation is pushing demand for the industry every year, but the majority of the energy needs (almost 70%) is met by coal and oil. Considering India’s commitment to be net zero by 2070, reducing the role of oil and coal is a must. The natural gas can help India to bridge its transition from fossil to non-fossil fuels as it can replace current oil and coal energy sources comparatively easily and has lesser impact on the environment. The Government is actively building policies which can push natural gas share in India’s energy mix from current 5-7% to massive 15%. This would need massive investments in building pipeline infrastructure, filling stations and developing and upgrading import terminals.
Historically, the growth of natural gas has been limited as the price of imported LNG was higher compared to coal. The slow pace of infrastructure was another bottleneck where LNG could have played a major role such as transportation and small industry. The latest developments from the Government are expected to remove these bottlenecks in a major way.
Interesting Insight : Although natural gas has only 6% share in India’s energy mix, in the case of Gujarat it has reached 25%
Infrastructure Push
The LNG regassification is a critical step in its distribution. India has almost doubled the regassification capacity in the last decade to 65 bcm/annum. The additional 40 bcm/ annum capacity will be added by the end of 2030.
Another critical component of the distribution, high pressure transmission lines, has seen strong uptick between 2020-24. Currently India has around 23,000 KM of transmission lines spread across the country. With the current pace of the growth, the total length of the line will reach 35,000 KM, doubling in length from 2020.
There has been a significant push for building CNG stations and domestic gas connections. Due to initiatives from PNGRB for allocating geographical areas for building gas infrastructure, there has been significant growth in CNG stations (7400 in 2024 vs 1000 in 2014). The government is targeting more than 50 mn domestic gas connections ( from current 14 mn connections) and 17000+ CNG stations by the end of 2030.
Future Demand Drivers for Natural Gas
It is expected that India’s natural gas consumption will reach 103 bcm/ annum in 2030 from the current 60-65 bcm/ annum. The growth will be driven by surge in gas power plants, increased CNG network across the country, use of gas in the oil refining industry and increased gas consumption from heavy industry such as steel and iron.