India's Core Industries
Natural Gas and City Gas Networks
Why India wants to increase natural gas in its energy mix, how LNG imports and city gas networks work, and the price challenges.
Natural gas is cleaner than coal and oil. India aims to raise gas’s share of its energy mix from around 6 percent to 15 percent.
Sources
- Domestic production, from fields off the coasts, such as the Krishna-Godavari basin.
- Imports of liquefied natural gas (LNG), shipped from Qatar, the US, Australia and others, and turned back into gas at terminals such as Dahej in Gujarat.
India imports around half of its gas.
City gas distribution
City gas distribution (CGD) networks supply:
- Piped natural gas (PNG) for homes, replacing LPG cylinders.
- CNG for vehicles, such as autos, taxis and buses.
- Gas for industries and businesses.
The government expanded licences to cover most of India’s districts through bidding rounds.
Pipelines
A national gas grid of pipelines is being built to connect supply to demand across India, including the eastern and northeastern regions.
Price challenges
- LNG prices can swing sharply, as in 2022 after Russia’s invasion of Ukraine, when prices soared.
- Domestic gas prices are set by formulas; a 2023 reform linked some domestic gas prices to crude prices with a ceiling to protect CNG and PNG users.
- Fertiliser plants and power plants are major users sensitive to prices.
Why gas matters
- Cleaner air in cities from CNG vehicles.
- Lower emissions than coal for industry.
- A bridge fuel in the energy transition.
In Delhi, a court order in the late 1990s pushed buses and autos to switch to CNG. Air quality improved, and CNG became the standard fuel for public transport vehicles in the city.
Gas emits less than coal and oil, but it still produces CO2, and methane leaks can add to warming.
- India aims to raise gas's energy share from about 6 to 15 percent.
- About half of India's gas is imported as LNG.
- City gas networks supply PNG for homes and CNG for vehicles.
- Volatile LNG prices and pricing formulas are challenges.
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