Policy
The Suez Canal / Red Sea Crisis: Impact Spreading From Crude Price Increase To CO2 Emissions
more...


Biden’s Pause On LNG Exports From USA Threatens Future Energy Security
more...


OMCs Reporting All Time High Profits Will Retail Prices Be Reduced Before Elections?
more...


Oil Companies Focus On Expansions Not Greenfield Projects
more...


India Emerges Among Front Runners In The Race For Renewable Energy Capacity
more...

Regulation
Unpredictable Nature Of India’s Natural Gas Demand
more...


Government Open To Stake Dilution In Upstream Major ONGC
more...


FAME Subsidy Cut By FM Had An Element Of Surprise?
more...


Govt. Hikes Windfall Tax On Crude Again
more...

Alternative Energy / Fuel
SAEL Secures $1 Bn Capital To Fund Its Renewable Energy Portfolio
more...


Cabinet Approves Rs 85 Bn Incentive Scheme For Coal Gasification Projects
more...

New Projects
L&T Energy Hydrocarbon Bags ‘Large’ Order From IndianOil
more...


Shardul Amarchand Mangaldas Advises Petronet LNG On Gopalpur Project
more...

Market Watch
PetronetLNG Signs Long Term Deal For LNG Imports From Qatar
more...


Servotech Power Systems, BPCL To Set Up 1,800 EV Charging Stations Pan India
more...

Companies
Crown LNG
more...


Adani Total Gas, INOX India Join Hands To Distribute LNG
more...


Oil India To Invest Rs 60 Billion In E&P In 2025
more...


Engineers India: Net Profit At Rs 633.5 Million
more...


Gujarat Gas Signs MoU With HPCL
more...

Press Release [FREE Access]
Petro Intelligence » Gas Ratio Target: Time For A Revision?

By R. Sasankan

When Prime Minister Narendra Modi announced his ambitious objective to raise the contribution of natural gas in India’s energy mix to 15 per cent by 2030, the experts in the petroleum industry were left astounded by the boldness of the claim.

But the reality has started to sink in: it is becoming apparent to everyone just how arduous this climb is going to be. Where have we got on the road to that magical objective?

On July 25 last year, the minister of state for petroleum and natural gas said in written reply in the Rajya Sabha, the upper House of Parliament, that the government had set a target to raise the share of natural gas in energy mix to 15 per cent by 2030 from about 6.3 per cent now. The minister then went on to list the initiatives the government has taken to achieve the daunting target.

The Prime Minister articulated the goal to raise the contribution of gas to the energy mix in 2017 – and must have made the announcement on the basis of inputs from the government’s energy pundits.

But are we trying to delude ourselves? In 2021 – four years after Mr Modi announced the objective – Fitch Ratings came out with a report to track the progress towards that goal which showed that the growth of natural gas from all sources at 6 per cent, which meant that it was nowhere near outpacing the total energy growth.

Even more sobering is The Energy Outlook, the reputed publication produced by British Petroleum (BP). In it 23rd edition, the BP report projected that the share of natural gas in India’s energy mix would range between 7-11 per cent by 2050, from a current level of around 6.5-6.7 per cent. Clearly, India is likely to undershoot the target that Mr Modi has set.

Even the Organization of the Petroleum Exporting Countries (OPEC) has forecast in its latest world oil outlook that the share of natural gas in India’s total energy mix will reach 10.6 per cent by 2045 compared with the government’s target of 15 per cent by 2030. OPEC’s projections are close to those made by BP in its annual outlook.

The target of a 15 per cent gas ratio crops frequently in media headlines, probably out of a sense of belief that Prime Minister Modi will not allow himself to be embarrassed by failure. So, how will Modi wriggle out of this tight situation? Can he rescue the mission or should he bail out of it? I haven’t come across a single energy pundit who believes that the target can be achieved.

I look at the issue slightly differently. If there is any likelihood that the target will collapse – and there is every reason to believe that it will – the Modi government can be expected to act decisively on certain issues that will make a substantial difference to India’s energy mix.

India imports natural gas in the form of LNG to meet more than half of its domestic demand. In the absence of a major commercial gas discovery within the country, this gap is projected to widen. The reserves in the producing fields of ONGC are getting depleted. The national oil companies have been stepping up their exploration activities but these have only spawned mostly dry wells. India is perceived to have only limited hydrocarbon reserves in its sedimentary basins.

If it isn’t a supply side issue, the solution could emerge on the demand side. The share of natural gas in the energy mix can be increased only if the consumption of natural gas increases. Indian consumers are highly price sensitive. This is a country where gas-based power plants had to remain idle due to the lack of demand for the relatively expensive power generated by plants using imported LNG.    

Put bluntly, for natural gas to become 15 per cent of India’s energy mix, re-gasified LNG has to be priced at under $ 6/MMBTU for the end user. Nobody is interested in pricing gas at that level. The domestic companies were paying $12.46 to Reliance Industries for its natural gas till March end this year under HP/HT fields pricing, which was lowered later in tune with the pricing policy.

With effect from October 1, the government increased the prices of domestic natural gas from $8.60/mmBtu to $9.20/mmBtu. In comparison, natural gas at Henry Hub is currently selling at $2.71/MMBTU inclusive of transport cost to Henry Hub. So, clearly India does not want a situation where cheap gas enhances its share in the energy mix.

My reading of the situation is that Prime Minister Modi will not give in so easily. He is expected to take certain decisive steps to ensure affordable natural gas for the Indian consumers. This can be achieved by acquiring producing gas fields overseas: Either through outright purchase of a gas field or acquiring a majority stake in a joint venture with operatorship. Such fields are available in the US. India’s GAIL, which boasts of a dynamic leadership, has already moved in that direction by bidding for a producing field in the US. Other public sector enterprises can try to clinch similar deals, either alone or as part of a consortium. The Prime Minister’s intervention could speed up matters.

Russia is another country where Indian companies can pitch for partnership deals in producing fields and LNG projects. The Ukraine conflict has provided a golden opportunity to actively pursue such deals.

Production from Sakhalin-1 stopped in April 2022 after Exxon Neftegaz declared force majeure at the project in response to international sanctions imposed on Russia after its invasion of Ukraine. India’s ONGC Videsh Ltd (OVL), the overseas subsidiary of ONGC, has been a partner in Sakhalin-1 LNG project with a 20 per cent stake from day one. Moscow assigned the Sakhalin-1 project and operatorship to a regional subsidiary of Russian oil producer Rosneft. OVL had the opportunity to become the operator if the political leadership had exerted its influence on a beleaguered President Putin. It appears that New Delhi made no such attempt. For obvious reasons, India is walking a very tight rope in its friendship with Russia. The situation can change in the not too distant a future.

By now, it is clear that the 15 per cent gas share target is highly unrealistic and, therefore, destined to remain a pipe-dream, at least until the so-called target date of 2030. There is virtue in being realistic about goals. There is no harm in extending the target date by another 10 or 15 years, provided there is unflinching political resolve to achieve that ambitious target that was made without careful thought.



To download the latest issue 'Volume 30 Issue 21 - February 10, 2024', click here
Petro Intelligence [FREE Access]
Halving Of OMCs Budget And Unchanging Petrol And Diesel Prices: Are They Connected?
more...

Buy Assets In US And Swap Crude With Europe
more...

Cheap Crude Does Not Benefit PSU Refineries
more...

Double Trouble
more...

Foreign Investment
Adani Total Dhamra LNG Terminal Operating At 55% Utilisation Rate
more...

Overseas Investment
Oil India Looking At Return To Libya
more...

Gas Scene
Sector-wise Consumption Of Natural Gas
more...


Higher LNG Imports Elevate Natural Gas Consumption Level in January 2024
more...


Near Total LPG Penetration Achieved
more...


India’s Fluctuating Gas Import Dependency
more...


Gas Transportation Major GAIL’s Physical Performance
more...


Growing CGD Sales In India
more...


Domestic Natural Gas Scene In December: Targets Elude, Production, Consumption More
more...


India’s LNG Import: Import Quantity Shrinks As Prices Go Up
more...


India’s LNG Import Picks Up As Market Prices Fall
more...


Sectoral Consumption Of Natural Gas
more...


Production Targets Confuse Domestic Natural Gas Scene In November
more...


Shale Gas & Oil Eluding India
more...


Domestic Natural Gas Scene in October 2023
more...


Natural Gas Price Trends: Global And Domestic
more...


Sectoral Consumption Of Natural Gas In September 2023
more...


CGD Business Registers Impressive Growth
more...


Domestic Natural Gas Scene In September: Production Up, Targets Eluded
more...


Sector-wise Natural gas consumption in August and April- August 2023
more...


Domestic Natural Gas Scene In August 2023
more...


How Drastically High LNG Prices Prune India’s Gas Import Dependency?
more...


Sector-wise Consumption Pattern Of Natural Gas Remains Unchanged
more...

Data Section
Monthly Upstream Data
Monthly Downstream Data
Historical database
Data Archives
Special Database
Russia Retains 37% Share In India’s crude imports, OPEC Share Down Further
more...


Indian Crude Basket Prices In January 2024
more...


Consumption Growth In Diesel, Petrol, Jet Fuel, LPG
more...


Fuel & Loss In Indian Refineries
more...


ONGC’s Widening Collaboration With International Companies
more...


Oil India’s Expanding Domestic Assets
more...


IOC Emerges As A Major Force In Petrochemicals
more...


What Has Been The Implementation Progress Of ONGC’s Major Projects In FY 23-24
more...


Middle Distillate Yield In Public Sector Refineries
more...


Specific Energy Consumption In Public Sector Refineries
more...


India’s Petroleum Products Export Up In December 2023, Import Declines
more...


Analysis Of Crude Oil Processed In Indian Refineries in December 2023
more...


OPEC Share Continues to slide In India’s Crude Import, Russia Still Strong
more...


India’s Oil Production, Domestic Vis a vis Overseas
more...


India’s Widening Fuel Marketing Infrastructure
more...


December 2023 Consumption Growth Of Petroleum Products Moderate
more...


Crude Oil Import Bill Poised To Shrink In FY 2023-24
more...


Production And Consumption Of Petroleum Products Maintain Healthy Growth During April-Dec 2023
more...


Will PSU Oil Cos Achieve Capital Expenditure Target For FY 23-24?
more...


Petroleum Sector Revenue Contribution To Central / State Govts, Declining Subsidy
more...

Tenders [FREE Access]
ONGC
more...


GAIL
more...


ONGC
more...