July 12, 2023 [Financialexpress]- India needs to create storage for natural gas to promote a robust gas market and to shift towards cleaner fuel, Petroleum and Natural Gas Regulatory Board (PNGRB) chairperson Anil Kumar Jain said on Monday. The board is likely to take this up with the government.
The regulator’s comment comes at a time when the latest National Electricity Plan, 2022-2032, unveiled by the Central Electricity Authority signalled no additional gas-based power capacity. Also, the high price of domestic gas and imported LNG has apparently led to a slump in demand for gas from several user industries of late.
“For market dynamics and supply assurance for the consumer to shift to gas, gas storage must be there,” Jain said on the sidelines of India Gas Infrastructure Conference 2023 organised by industry body FICCI. Creating gas storage is capital-intensive. Storage assures the buyer of gas availability on demand, while the supplier can buy and store gas when the price is low, he said, adding that the storage can be created either by the supplier or the pipeline developer with a built-in tariff for the storage facility.
The current share of natural gas in India’s energy mix is 6.2% and the Prime Minister has set a target of 15% by 2030. With India’s energy demand rising by about 5% each year, much improvement in the gas infrastructure needs to be done for the country to become a gas-based economy, he said.
Length of India’s gas pipeline infrastructure has reached to 22,000 km and the aim is to have a 35,000 km pipeline network in the next 5-6 years.
India should stop looking at gas in compartments like LNG, domestic gas and CGD, he said. Instead of splitting the market in transport and cooking versus industry and commercial, the country needs to look at gas as natural gas.
“The LNG business has to integrate with the gas business. If gas has to grow, it has to grow on its own merits and conditions are very good. With 45 million tonne of regasification capacity in the LNG terminals, and only 25 MT or so coming through it. This is an opportunity,” he said.
The gas storage capacity will depend on the demand for natural gas during summers and winters, he said. Currently, India has a 5 million tonne of crude oil storage capacity built at three locations as strategic petroleum reserves.
“When the country can import 86% of its oil requirement, it can better develop a gas based economy. Natural gas is a cleaner fuel and LNG per million BTU is cheaper than oil,” he said, adding that transition to green hydrogen will take time as it is commercially not viable.
Currently, green hydrogen is three times as expensive as natural gas. Green hydrogen is expected to become cost competitive by 2035-2040 compared to natural gas, both as fuel and feedstock. Till 2040, natural gas can play the role of transition fuel in reducing emissions.
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