India is currently the third largest energy consumer globally. With a rapidly rising population, the country is likely to become one of the largest contributors to energy demand growth in the world. While volatile crude oil prices have, of late, adversely affected the sector’s growth trajectory, the government’s focus on city gas distribution (CGD) infrastructure and alternative fuels and on increasing the share of natural gas in the energy mix is expected to drive future growth. In an interview with Indian Infrastructure, Gajendra Singh, member, Petroleum and Natural Gas Regulatory Board (PNGRB), talked about the recent trends in the sector, the major achievements in the past one year, the significant policies introduced by the government, its key priority areas, and the future outlook. Excerpts…
What is PNGRB’s perspective on the state of the oil and gas sector in India and on increased use of natural gas? What are the key challenges for the sector?
To chart the path towards achieving net-zero emission targets, the government has envisaged 15 per cent use of natural gas by 2030 in India’s primary energy mix. At present, natural gas contributes around 7 per cent in India’s primary energy mix.
Taking this into account, PNGRB’s focus is on the implementation of a cross-country natural gas pipeline grid and CGD network to connect all big and small towns for PNG (piped natural gas), CNG (compressed natural gas) and commercial customers, and reach all industrial demand centres.
Significant investment is being made and committed by authorised entities involved in the development of a gas-based economy. We are witnessing a growth of 12-13 per cent in the CGD sector and this is likely to increase to 18-20 per cent in the near future.
PNGRB, through a competitive bidding process, has authorised 264 out of 295 geographical areas (GAs), covering about 98 per cent of the population and 88 per cent of the total land area for development of CGD networks. Now, only GAs situated in far-off terrains such as Leh, Ladakh, part of the north-eastern states, Lakshadweep and Port Blair are left and will be covered in future on the development of infrastructure in those areas.
In 2015, the CGD sector was accorded top priority for the use of gas and the Indian government is making continuous efforts to ensure domestic gas supply at affordable prices.
Domestic gas production has increased by about 18 per cent in the recent past and may increase further due to policy initiatives in the upstream sector and attractive current gas prices to domestic producers. This may also help in reducing import dependencies. LNG imports may decline by about 6 per cent.
On the challenges front, India is the third largest energy consumer globally and, with growing urbanisation and the focus on increasing manufacturing and economic growth, it is going to be the largest energy demand centre, resulting in its large dependency on imports.
India’s per capita energy consumption is one-fourth that of China’s and one-tenth of the US and is below the global average. With an increase in incomes and affordability and concerted efforts by the government, the country’s energy demand is going to grow at a rapid pace.
Meanwhile, the volatility involved in the oil and gas sector and the large dependency on the import of oil and gas are affecting the sector’s growth trajectory.
To overcome this, there is a thrust on the development of green hydrogen and on increasing the use of solar, wind and biogas and blending of ethanol. These are being accorded the highest priority by the government to drive future growth.
In the given geopolitical scenario, the current LNG supply and demand dynamics are likely to continue till 2024. The underlying challenge for India is going to be to maintain a balance in the import of oil and gas.
What have been the key achievements of PNGRB in the past one or two years?
Some of the key achievements are:
- Completed the bidding process and authorisation to GAs under the 11th and 11A rounds. The 11th round was the largest CGD bidding round in terms of the number of districts and populations to be covered. More than 200 districts were awarded under the said round.
- Addressed the minimum work programme (MWP) challenges faced by CGD entities during the pandemic period. In order to facilitate CGD entities to overcome the pandemic situations, extension for a period of two years for the achievement of MWP was given to all eligible entities.
- Added 166.6 million PNG numbers, 1,295 CNG stations and 77,500 inch km network
- Laid and commissioned a 1,700 km trunk pipeline
- Cleared the backlog of legal cases pending since last three years.
What are your key focus areas and priorities for the next one to two years?
The key focus area is to keep pace with the growing energy demand, for which relevant regulations are being reviewed, involving all stakeholders, that is, consumers, and authorised entities to overcome any kind of impairment.
PNGRB has taken feedback on various requirements, such as unified prices, to make the gas market more vibrant. A choice is being given to CGD’s industrial customers for choosing suppliers in case of non-availability of CGD infrastructure.
PNGRB is also focusing on the safety needs of the industry to make operations accident-free. We have already conducted awareness programmes and are sharing best practices among all entities.
Regulations are under consideration for capacity requirements in re-gasification terminals and for the trading of domestic gas on the gas exchange or outside.
Which are the areas where you feel there could have been more progress?
To reduce carbon emissions, expansion of the CNG segment could have been initiated long back in cities such as Kolkata and Chennai and other metropolitan areas where pollution levels are high.
Industries using polluting fuel and located near cities should be given the option to use clean energy, as is being done in Agra and Firozabad.
CGD entities have huge requirements for gas meters, dispensors, compressors and other associated items. Currently, these are being imported instead of local manufacturing facilities being set up.
There is also a need to create an ecosystem to use LNG as auto fuel for long-haul trucks and buses. This has huge potential and will be a step forward to achieve the net-zero targets by 2070.
Also, there is a potential to covert commercial ships/boats from diesel to CNG/LNG