India’s Shift To A Gas-Based Economy

India has decided to shift into a gas-based economy gradually. This decision has been made keeping in view the urgent need of curbing greenhouse gas emissions amidst climate change and other environmental concerns. This move is expected to shell off present emissions rate by about 30% till 2030.

CNG StationThe gradual shift to a sustainable gas economy will be made by boosting domestic gas production and procuring cheap Liquefied Natural Gas (LNG) as imports. A long-term LNG deal is under negotiation by India with Qatar and importer Petronet LNG is in talks with Exxon for renegotiation of gas pricing from its Australian project. A successful negotiation by India will fetch gas at affordable price.

India’s dependency on gas presently stands at about 8%, while India dependency on oil for its energy needs is about 25%. According to government estimates, India’s gas supply deficit is expected to increase by another 50% till 2022. Indian PM Narendra Modi is expected to visit Iran in the third week of this month to seal the deal on Chabahar port as well as ink a proposed Indo-Afghan-Iran trilateral agreement on Chabahar port to glue up relations between the three countries. He is also expected to talk to Iran on procuring gas at fair price. Iran has exclusively set aside a gas field (Farzad B) for Indian firms to develop it. This may lead India to build an LNG plant there which will be useful for both India’s consumption and for marketing.

Oilind

While there is no doubt that switching over to a gas-based economy will reduce the dependence on oil, it would also be important to note how this move will affect domestic oil producers. Recently, India has decided that since the country imports most of the oil it uses therefore ones who produce oil domestically cannot export it. The government told the Delhi High Court that Cairn India cannot be permitted to export excess crude from its Rajasthan oil field, till India attains self sufficiency.

This can be considered to be a good move to ensure India’s energy security which could be adversely affected by allowing crude oil exports as then more expensive and lighter crude oil would have to be imported. This ensures that oil produced domestically stays within the country and is refined for the specific needs by the downstream industry. Although the move may help in reducing oil imports to a very small extent, it will pave the way for the Oil & Gas Ministry to focus more on the transition to a gas-based economy. India has already built import terminals on both its eastern and western coasts, and is also in the process of constructing pipelines within the country to provide a stimulus to gas usage in industries.

Let’s hope that this transition will help India to emphasize on building the way for a cleaner, greener and almost self-sufficient economy someday.

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