Gujarat Unfolding India’s Natural Gas-based Economy Model
Rakesh Roy

Natural gas accounts for just 6.2 percent of India's energy basket as compared to the global share of 24 percent in the world energy mix. Looking at the potential of natural gas, being a clean & green fuel, and the environmental and COP 21 commitment, the Indian Government has taken initiatives to increase the share of the green fuel to about 15 percent in the energy basket by 2030. Though the domestic gas production has not been so remarkable, the demands have been increased year-on-year due to various reasons. The growing demand of cooking gas by households, demands from Industry like; Power, Fertiliser, Chemical & Petrochemicals, and the changing customer behaviour & business dynamics in the Automotive Industry from Petroleum vehicles to Gas vehicles, are the few obvious reasons for the growing significant of natural gas. Of course, all the demands are driven by the Government Policy initiatives towards the use of clean energy resources.

The roadblocks to achieve the ambitious vision to the growth of natural gas market are not funding; however, the stranded domestic production, pricing and allocation of gas, and mostly the requisite infrastructure development - pipelines, import terminals and city gas distribution (CGD) networks.

India's Focus to Shifting to a Gas-based Economy
Honourable Prime Minister Narendra Modi recent statement 'The country will be shifting to a gas-based economy in a few years,' is a welcome development from the point of both costs of energy and betterment of the environment. Recently, Prime Minister has laid the foundation for the ninth bidding for city gas distribution (CGD) projects, under the Petroleum and Natural Gas Regulatory Board (PNGRB), covering 129 districts and 65 geographical areas (GAs). The PM also launched tenth CGD bidding round in 50 GAs spread over 124 districts in 14 States.

With this it is expected that 200 lakh households will have piped gas connectivity very soon. Natural gas, predominantly methane, is a cheap and environment-friendly fuel and currently the country consumes around 45 million tonnes of oil equivalent (mtoe) of natural gas, which comes to nearly 6.2 per cent of its primary energy consumption.

As of November 2018, there were 1,491 CNG stations, 1,90,836 CNG vehicles, and 46,40,998 domestic, 27,097 commercial and 8,278 industrial connections in the country. Currently, there are 16,226 km of gas pipelines having a capacity of 368.5 million standard cubic meters per day (mmscmd). Another 11,216 km of pipeline is under construction.

As per a recent statement by Dharmendra Pradhan, Oil Minister, Govt of India : India is investing over USD 60 billion in developing natural supply and distribution infrastructure as it chases the target of more than doubling the share of natural gas in its energy base to 15 percent by 2030.

While globally, natural gas constitutes 24 per cent of the primary energy consumption, in India, Gujarat is the only state which has relatively better access to natural gas, is having a share of 25 percent in its energy basket.

Green Gujarat - Unfolding India's Gas-based Economy Model
Presently, in Gujarat natural gas comprises 25 percent of the energy mix which is higher than world average of 24 percent (India average is 6.2 percent). Seven gas companies are operating and cover approximately 85 percent of the state through 469 CNG stations (32 percent), catering to 0.9 to 1 million NGVs (30 percent) daily out of a national total of 1491 CNG stations and 3.2 million NGVs.

Companies like Gujarat Gas, Adani group, Torrent Group, Petronet LNG, Shell Group, Gujarat State Petronet Ltd, Shapoorji Group, IRM Energy and Sabarmati Gas have invested in various infrastructure facilities from LNG terminals to CGD networks to pipeline infrastructure to power plants, creating an ecosystem for a gas-based economy.

In promoting the green fuel initiative of the state, Vijay Rupani, Chief Minister of Gujarat, recently announced the 'CNG Sahbhagi Yojana'. It aims to resolve the issue of long queues at CNG stations by adding another 300 stations in two years. Further, the state government recently gave its nod for what it claims to be the world's first compressed natural gas (CNG) port terminal. The facility, to come up in Bhavnagar, will be set up jointly by the UK-based Foresight Group and the Mumbai-based Padmanabh Mafatlal Group.

The central government, while planning to cut down on oil imports, is shifting to creating a gas-based economy. Gujarat, which is considered a gas hub for over two decades now, may offer some answers. With new infrastructure facilities coming up and the state pushing for cleaner fuel options, Gujarat is likely to consolidate its position further.

It became the first and only Indian state so far to be completely covered under the piped gas distribution network after the ninth round of bidding by petroleum and natural gas regulator in 2018.

Producing 47 percent of the nation’s natural gas, it is home to 19.6 lakh piped natural gas users who account for 42 percent PNG customers in India.

In his statement, Saurabh Patel, Energy Minister, Government of Gujarat, said that 'Gujarat has been a pioneer in creating a gas -based economy and natural gas usage across various applications has grown exponentially over the last two decades. Continuing with our firm belief in the future of natural gas and in line with our prime minister's vision of turning India into a gas-based economy, the Torrent Group has recently forayed into the CGD sector with the mission to supply clean fuel to its authorised areas spread across 32 districts in seven states.'

"Torrent group has a long-standing commitment to promoting natural gas, going back more than 25 years, when we set up India’s first private sector gas-based power plant. Torrent has the largest gas-based power capacity of 2,730MW in the country, all of which is in Gujarat," says Jinal Mehta, Managing Director, Torrent Power Ltd.

Gujarat-based companies bagged rights to retail CNG and PNG in a number of cities during the 9th and 10th round of auctions by PNGRB. Torrent Gas bagged licences for 18 cities, while Adani Gas won 15 areas on its own and 10 in joint venture with Indian Oil Corporation. State-run Gujarat Gas bagged rights for 7 cities. The cumulative investments by these players to develop CGD networks in these cities will be more than 25,000 crore over the next few years.

Praising the Gujarat leadership for its policy initiatives towards the growth of Natural Gas drive, Pranav Adani, Managing Director - Oil and Gas at Adani Group, said: 'Thanks to the visionary leadership, Gujarat is a role model for the gas-based economy. Today, Gujarat is the only state with 100 percent coverage of CGD development authorisation. The enabling state policies and its conducive eco-system made Gujarat Gas the largest city gas distribution company in India.' Apart from developing natural gas pipeline supply infrastructure, Gujarat is the only state with two operational LNG terminals - Dahej, run by Petronet LNG, and Hazira terminal by Shell Group. It currently holds about 25 percent share of natural gas consumption in total gas supplies on pan-India basis. While these two terminals handle about 70-80 percent of total gas and LNG supply in the country, a third one, set up jointly by Gujarat government, is all set to be commissioned soon. Two more LNG terminals, one by Shapoorji Pallonji group and another one by Swan Energy are under construction. Another terminal with a re-gasification capacity of 5 million metric tonnes per annum (mmtpa), built jointly by Gujarat Government and Adani Group at Mundra, is expected to be commissioned shortly. The state also houses 10 gas -based power projects with a capacity of 4,050 megawatts that have been developed by government and private companies.

"The presence of LNG terminals has acted as a catalyst and enabled Gujarat to position itself as the prominent gas corridor of the country with majority of LNG imports being sourced through these terminals," added Saurabh Patel, Gujarat Energy Minister.

Looking at the requisite infrastructure like; LNG Terminals and Gas grid Gujarat has to support the LNG value chain, Nitin Patil, CEO, Gujarat Gas Limited, rightly said: 'About 70-80 percent of the country's LNG comes from terminals in Gujarat. Very soon, more terminals will get operational. To back this up, we have developed a gas grid covering all districts. With gas-based power plants and fertilizer units, the state has an entire ecosystem ideal for a gas-based economy'.

While Gujarat Gas is the largest CGD of the country in terms of volumes and customer base, the Adani Group, which forayed in 2004, is biggest in terms of licenced areas. The group aims to add 9 lakh households and set up 100 additional CNG stations in next few years.

After setting up a huge pipeline network in the state, Gujarat State Petronet is currently implementing two cross-country natural gas trunk pipelines for an estimated investment of 6,500 crore.

The overarching aim of entering this domain was to make cleaner and affordable fuel available to the remotest corners of India and the state of Gujarat has played a pivotal role in this journey. Going forward, the strategic partnership with world's energy major Total would bolster this ambition. By contributing to India's vision of becoming a gas-based economy, Gujarat has been and continues to be a model state and leader to shoulder the nation's climate goals.