Significance of natural gas in India’s energy landscape

Significance of natural gas in India’s energy landscape

Subject: Economy

Section: Msc

• OPEC’s Projections: OPEC’s latest World Oil Outlook predicts that the share of natural gas in India’s energy mix will rise to 10.6% by 2045, whereas the Indian government aims for it to reach 15% by 2030.
• Current Gas Share: According to the Petroleum and Natural Gas Regulatory Board (PNGRB), India’s current share of gas in the energy mix is at 5.78%.
• BP’s Projections: The OPEC projections align closely with those made by bp in its recent Energy Outlook, which anticipates a natural gas share of 7-11% in the global primary energy mix by 2050.
• Impact on Coal Usage: Increasing the share of gas in the energy mix can lead to a reduction in coal usage, contribute to the mitigation of CO2 emissions, and facilitate the integration of intermittent renewable energy sources like wind and solar power.
• City Gas Distribution: The government is actively promoting the expansion of city gas distribution (CGD) systems, aiming to reduce the reliance on traditional cooking fuels in the residential sector. This expansion is expected to significantly increase gas consumption in the residential and commercial sectors.
• LNG-Powered Vehicles: Initiatives to promote natural gas vehicles, such as those offered by companies like Essar Group-led GreenLine, could provide further impetus to the use of natural gas in the transportation sector, particularly for long-range heavy-haul logistics.
• Gas-Fired Power Plants: Despite the suboptimal utilization of gas-powered plants in India due to a lack of domestic gas supplies and high LNG prices, there is potential for increased utilization in the future. OPEC’s report suggests that India’s gas demand could more than triple by 2045, reaching levels of 4.1 million barrels of oil equivalent per day (mboe/d) in the outlook period.

About OPEC (Organization of the Petroleum Exporting Countries):

1. Founded in Baghdad, Iraq, in September 1960 by five countries: Islamic Republic of Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela.
2. It is a permanent, intergovernmental organization with a primary objective to coordinate and unify petroleum policies among Member Countries.
3. Aims to secure fair and stable prices for petroleum producers, ensure an efficient and regular supply of petroleum to consuming nations, and provide a fair return on capital to industry investors.
4. OPEC is headquartered in Vienna, Austria.
5. Membership in OPEC is open to any country that is a significant oil exporter and shares the organization’s ideals.
6. 13 Member Countries: – Algeria, Angola, Congo, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, United Arab Emirates (UAE), Saudi Arabia, Venezuela.

About OPEC+:

1. OPEC and a coalition of non-OPEC oil-producing nations, which includes Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Oman, Russia, South Sudan, and Sudan, have formed an informal alliance known as ‘OPEC+’ or the ‘Vienna Group’. This collaboration was established in 2016 to collectively reduce oil production with the aim of stabilizing global oil prices.
2. OPEC+ is an alliance of crude producers that has been implementing supply adjustments in the oil markets since 2017.

Primary goals of OPEC and OPEC+

1. Collaborative efforts to stabilize the global oil market and ensure fair prices for petroleum products.
2. Implementation of production restrictions and adjustments to balance supply and demand dynamics.
3. Coordination of policies to secure a steady and efficient supply of petroleum to consumer nations.
4. Support for the stability and sustainability of the oil industry and related investments.

OPEC+ holds more influence than OPEC: –

1. Expanded control: OPEC’s 14 members control 35 percent of global oil supplies and 82 percent of proven reserves. With the inclusion of 10 non-OPEC nations such as Russia, Mexico, and Kazakhstan, those shares increase to 55 percent and 90 percent respectively. This affords OPEC+ a level of influence over the world economy never seen before.
2. Greater market share: OPEC+ collectively commands a significant share of the global oil market, giving the coalition more leverage in decision-making and a heightened ability to impact global oil prices.
3. Enhanced decision-making power: With a broader coalition and increased representation, OPEC+ has an amplified ability to shape and influence global economic conditions, making it a more formidable force in the oil industry.

About Petroleum and Natural Gas Regulatory Board (PNGRB):

• The Petroleum and Natural Gas Regulatory Board (PNGRB) was established under the Petroleum and Natural Gas Regulatory Board Act, 2005.
• Its primary purpose is to regulate downstream activities in the petroleum and natural gas sector.
• The PNGRB is responsible for overseeing the laying and expansion of transmission pipelines for both gas and petroleum, as well as city/local gas distribution networks.
• Entities operating in the petroleum and natural gas sector are required to register with the PNGRB. This includes entities involved in marketing petroleum products and natural gas, operating LNG terminals, and establishing storage facilities beyond a specified capacity.
• The PNGRB has the authority to monitor prices related to piped natural gas (PNG) and can implement corrective measures to prevent entities from engaging in restrictive trade practices.
• In the event of disputes, the PNGRB possesses the same powers as a civil court to settle such matters.
• The Appellate Tribunal established under the Electricity Act serves as the designated Appellate Tribunal for matters falling under the jurisdiction of the Petroleum and Natural Gas Regulatory Board Act, 2005.

Objectives of the National Gas Grid:

1. To address regional imbalance within the country by ensuring equitable access to natural gas and facilitating the availability of clean and environmentally friendly fuel across the nation.
2. To establish a robust network that connects gas sources to major demand centers, ensuring the smooth and consistent supply of gas to consumers across various sectors.
3. Facilitate the development of City Gas Distribution Networks in multiple cities, enabling the efficient supply of Compressed Natural Gas (CNG) and Piped Natural Gas (PNG) to households and industries.