Natural Gas Scenario in India: An Overview
10 Pages Posted: 12 Sep 2012
Date Written: September 10, 2012
The role of natural gas is of critical importance in the global gas markets. The last thirty years have seen a shift in the global energy fuel mix towards an increased role for natural gas. The competition between coal and natural gas has tremendous implications for air pollution and climate change since gas emits less than half the carbon dioxide of coal in most applications. Natural gas has assumed a significant role in power generation, industrial applications, residential heating and in some cases as a transport fuel as well.
Traditionally, gas was consumed in the major industrialized countries like Western Europe, East Asia, and the United States and most of the supplies have came from domestic sources and others nearby in the region. However, these regional markets became linked to one another through long distance transport of natural gas in the form of liquefied natural gas (LNG). Changes in supply and demand in one economy can have an effect on prices around the world. Thus, the 'LNG revolution' is unfolding slowly.
India has around 1.2 trillion cubic meters of natural gas reserves. The current demand is estimated to be around 57.32 billion cubic meters per year which is made up of around 45.58 billion cubic meters per year from domestic supplies and the rest from imported LNG, according to the India Hydrocarbon Vision 2025, published in 2002. India’s future demand for gas could reach 113.61 billion cubic meters per year by 2015 and 135 billion cubic meters per year by 2025, depending on how the gas market develops in the country.
It was under these compulsions plans to import gas were taken up. India signed a contract for the import of 5 million tons of LNG from Qatar, and plans to import piped gas from neighbouring gas-rich countries were initiated long before. These included the $7-8 billion Iran-Pakistan-India (IPI) project, the $3 billion Myanmar-Bangladesh-India (MBI) project and the $7.6 billion ADB-backed Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project.
One of the major questions for the future of the global gas market is the role of India. Although, today, India uses relatively small amounts of gas, but it could become a major global consumer in the future. Rising demand for imported gas in India will also shape the LNG market in the Pacific Basin and could lead to the construction of major international pipeline projects to monetize gas supplies in Russia and the Middle East.
This paper would focus on the optimum utilization of the natural gas according to our demand over the next decade. We will discuss on the the major gas-consuming industries in India like electricity generation, fertilizer production, and industrial use and would explore the demand for fuel choices in these sectors vis-à-vis the demand-utility scenario in our country.
Keywords: LNG Revolution, vision 2025, pipeline project, natural gas reserves
JEL Classification: G18, L71, L95, L98, Q48
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