The International Energy Agency (IEA) released the “India Gas Market Report: Outlook to 2030”, highlighting India’s ambition to increase the share of natural gas in its energy mix to 15% by 2030, up from 6% today.
Key Findings:
India’s Gas Consumption:
- Expected to grow by 60% by 2030.
- City Gas Distribution (CGD) sector will be the primary driver of demand.
- CGD supplies natural gas to households, industries, and vehicles through pipelines.
India’s Gas Production:
- 35 billion cubic meters (bcm) in 2023.
- The Krishna-Godavari deepwater fields contribute 25% of total output.
Imports:
- India is the 4th largest LNG importer globally.
- LNG imports are expected to more than double by 2030.
Compressed Biogas (CBG):
- Largely untapped potential, with current capacity less than 1% of total potential.
Challenges in India’s Gas Sector:
Pricing Issues:
- Legacy fields have gas price caps (~USD 10 per MMBtu), restricting full price discovery.
- Deepwater fields face additional pricing restrictions, limiting investment.
Market Monopolization:
- State-owned GAIL dominates both gas marketing and pipeline transmission, leading to conflicts of interest.
Storage & Infrastructure Limitations:
- No underground gas storage (UGS)
- Limited LNG storage capacity, creating supply risks.
Policy Recommendations by IEA:
Liberalizing Gas Pricing:
- Extend pricing freedom to all fields, as recommended by the Kirit Parekh Committee (2022).
- Remove price ceilings for deepwater and ultra-deepwater projects.
Market Reforms:
- Establish independent gas transmission system operators (TSOs) to ensure fair access to pipelines.
- Promote the Indian Gas Exchange (IGX) for efficient price discovery.
Infrastructure Development:
- Harmonize taxation across competing fuels (e.g., coal vs. natural gas).
- Develop Strategic Gas Reserves for energy security.
- Enable transparent third-party access to infrastructure.
The IEA’s report highlights the urgent need for reforms in India’s gas sector to achieve the 15% natural gas target by 2030. Liberalized pricing, infrastructure expansion, and market reforms will be key enablers for India’s transition to a cleaner and more resilient energy system.
