Making India a Gas-based Economy


The Indian government is intending to move towards a gas-based economy by increasing the share of natural gas in India’s energy basket from the current 6-7% to 15% by 2022

What is gas-based economy?

Gas-based economy implies gas as the main commercial energy source in the energy mix of an economy

Advantages of Natural Gas for India

  1. Environmentally clean:
  • Natural gas as a fuel source is much “greener” than alternative fossil fuels. According to the Environmental Protection Agency (EPA), natural gas produces roughly half as much CO2 as coal and 32% less than oil.increased gas utilization is also expected to help India meet its intended nationally determined contributions (INDC) commitments under the Paris Agreement
  • In addition to emitting lower levels of CO2, natural gas emits far fewer pollutants into the air. For example, burning natural gas produces less than 1% of the amount of sulphur dioxide compared to coal or oil.
  1. Economical/ Cost Efficient:
  • Compressed Natural Gas (CNG) is 40%cheaper than Liquefied petroleum gas (LPG), 60% cheaper than gasoline and 45% cheaper than diesel. A 10% replacement of liquid fuel into gas will reduce India’s import bill by nearly $3billion every year.
  1. Convenience:
  • Gas is continuously fed into the system so there are no hassles of refilling. Further, it is piped, thus does not require any space to store, hence handling is easy, safe and secure
  1. Possibility of Energy Independence:
  • A gas-based economy would help India be less reliant on crude oil imports by substituting the use of oil products in industrial and residential applications.
  1. Improved Access:
  • Gas utilization would also help improve access to electricity and clean cooking for India’s growing population with unmet energy needs. According IEA, 2017, A total of 244 million Indians do not have access to electricity and 819 million do not have access to clean cooking fuel.
• Natural gas is a naturally occurring hydrocarbon gas mixture consisting primarily of methane, but commonly including varying amounts of other higher alkanes, and sometimes a small percentage of carbon dioxide, nitrogen, hydrogen sulphide, or helium.
• It is formed when layers of decomposing plant and animal matter are exposed to intense heat and pressure under the surface of the Earth over millions of years.
1. Liquefied Natural Gas (LNG):
• To overcome the transportation drawback, natural gas shipping takes place from available regions to other countries in liquid form. LNG has volume that is 1/600th of its original volume.
2. Compressed Natural Gas (CNG):
• Natural gas is compressed to 200 bar pressure so that the volume is almost 1% of the original. Unlike LNG, the plant, machinery, and investment required for CNG production is considerably less.
3. Liquefied Petroleum Gas( LPG)
• LPG production happens during the refining of crude oil. The composition is predominantly propane, butane, or a mix of these and other gases. In addition, extraction of LPG takes place directly from some of the oil wells. The calorific value is higher than the Natural gas in the range of 95 MJ /kg

Status of Natural Gas in India


India has 26 sedimentary basins covering 3.14 million sq. km of area. About 44 % of India’s total sedimentary basin area is on-land 56% is offshore. Only 22 % of the total area falls under the category “Moderately to well explored”. Exploration efforts have been initiated in 44 % of the area and the balance 34% remains poorly to completely unexplored.


  • The role of natural gas in India’s energy mix is limited- only 6% as of 2016

  • Gas consumption in India is driven by five sectors: fertilizer (34% of total gas demand in fiscal year 2015-16), electric power (23%), refining (11%), city gas distribution, including transport (11%), and petrochemical (8%) industries.
  • Natural gas consumption varies widely by region across India. For example, the states of Gujarat and Maharashtra in the west and Uttar Pradesh in the north consume more than 65% of the India’s natural gas, while making up only 31% of the population. Gujarat consumes the highest percentage of natural gas.


Steps taken:

  1. Gas4India Campaign: It is a multimedia, multi-event campaign to communicate to people, the national, social, economic and ecological benefits of using natural gas as the fuel.
  2. Hydrocarbon Exploration and Licensing Policy (HELP): It is a contractual and fiscal model for award of hydrocarbon acreages towards exploration and production (E&P). It provides a single, or uniform, license for the exploration and production of all conventional and unconventional hydrocarbons from an entire contract area.
NELP: New Exploration Licensing Policy (NELP) was created in 1997 ended the state dominance and created a competitive environment leading to liberalization of oil and gas exploration and production industry. However, it failed to keep the momentum of production growth and attracting the foreign investment and HELP was introduced to replace NELP
  1. Open Acreage Licensing Policy (OALP): OALP, a part of HELP, is aimed at enabling faster survey and assessment of areas with oil and gas potential. It enables companies apply for particular areas they deem to be attractive to invest in, and the Centre then put those areas up for bids.
  2. Discovered Small Field Policy: Launched in 2016, the policy aims at extracting the Oil, Natural gas from the un-monetized small oil/gas discoveries that are available in India
  3. Sustainable Alternative towards Affordable Transportation (SATAT):It aims to promote Compressed Bio-Gas (CBG) as an alternative, green transport fuel. Under the scheme, public sector oil marketing companies will seek expression of interest from potential entrepreneurs to set up compressed bio-gas production plants and make it available in the market for use as auto fuel.
Compressed Biogas (CBG):
CBG is the purified form of biogas, without other gaseous impurities.In CBG production, biogas is cleaned of hydrogen & carbon-dioxide to produce 95% methane gas. This pure gas is compressed and bottled for transportation and usage.
  1. National Seismic Programme of Un-appraised areas: Under the programme, Government has approved the proposal for conducting 2D seismic survey for data Acquisition, Processing and Interpretation (API) of un-appraised areas
  2. Coal bed Methane Policy, 1997: It seeks to offer the blocks for exploitation of Coal Bed Methane (CBM) through open completive bidding system. In 2018, the government approved a framework for Coal Bed Methane extraction under which Coal India and its subsidiaries will be able to extract Coal Bed Methane from its mines without seeking approvals under the Petroleum & Natural Gas Rules 1959 (PNG Rules, 1959).
  3. Pipeline Projects for Natural Gas

National Gas Grid: Since a National Gas Grid (NGG) was conceptualized in 2000, India has built more than 16,000km of gas network. Recent initiatives include:

a) Pradhan Mantri Urja Ganga Project (Jagdishpur – Haldia &Bokaro – Dhamra Pipeline Project (JHBDPL)): It seeks to cater to the energy requirements of Uttar Pradesh, Bihar, Jharkhand, Odisha and West Bengal.

b) Barauni to Guwahati Pipeline: The pipeline will pass through the Bihar, West Bengal, Sikkim & Assam

c) North East Region(NER) Gas Grid: It will pass through Assam, Sikkim, Mizoram, Manipur, Arunachal Pradesh, Tripura, Nagaland and Meghalaya in a phased manner

d) Kochi-Koottanad-Bangalore-Mangalore Pipeline (Phase-II): It will pass through Kerala and Tamil Nadu

e) Ennore-Thiruvallur-Bengluru-Puducherry-Nagapatinam-Madurai-Tuticorin Pipeline (ETBPNMTPL): It will pass through the State of Tamil Nadu, Andhra Pradesh & Karnataka.

International gas pipelines:

  • Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline,
  • the Iran-Pakistan-India pipeline (IPI) and
  • Iran-Oman- Russia and India- pipeline project
  1. City Gas Distribution (CGD) Network:CGD refers to transportationor distribution of natural gas to consumers in domestic, commercial or industrial and transport sectors through a network of pipelines. Recently, the Indian Prime Minister laid Foundation Stones of City Gas Distribution (CGD) Projects in 65 Geographical Areas (GAs) in 129 Districts.

Issues and challenges

  1. Reliance on Imports for Gas Supply: India is the world’s fourth-largest LNG importer, a substantial share of which comes from Qatar.As domestic energy production has lagged demand growth, India’s import dependence has increased. Consequently, concerns about India’s energy security have been rising.
  2. Pricing and Affordability: Lower domestic gas production than expected and higher international LNG prices have rendered the use of gas uneconomical for power generation sector as it cannot compete with coal based power generation at current domestic coal prices
India’s fertilizer industry cannot absorb high gas prices, because that would result in higher food prices for the poor. As a result, the industry receives priority access to domestically produced natural gas. The electricity sector ,in turn ,has to depend more on imported natural gas, which is relatively expensive .These distortions are the primary reason why gas is unable to compete with coal in power generation
  1. Competition: The nature of the Indian gas market, where some aspects are liberalized and some aspects are govt. controlled, together with frequent government intervention in the form of multiple policies and regulations, has not encouraged competition and has been detrimental for the entire gas supply chain
  2. Gas Distribution Infrastructure:pipeline network has been developed mostly in the northern and western regions. A large part of the country lacks  transmission  infrastructure  and  access  to  gas
  3. Lack of coordination:The presence of number of regulatory bodies and disconnect in policymaking and an incoherence in implementation of policies have affected the growth of the sector.

Note: he Ministry of Petroleum and Natural Gas (MoPNG), the Directorate General of Hydrocarbons (DGH) and the Petroleum and Natural Gas Regulatory Board (PNGRB) – are in charge of natural gas regulation

  1. Quality and availability of field data:The poor quality of data remains a challenge in India for both policy makers and for prospective investors in the private sector
  2. Lack of progress of international gas pipelines:India has been considering gas imports by pipeline. However, despite some discussion of pipelines, there has been no progress made on international pipelines

Way Forward:

  1. An integrated national-level energy policy that define and clearly demarcatesthe role of natural gas in India’s energy mix is needed
  2. The biggest risk for future gas demand is the affordability of gas in the key demand sectors, such as power and fertilizers. Consequently, there needs to be an adequate mechanism to protect these sectors from higher gas prices. In the power sector, an increase in Clean Energy Cess could make gas a more attractive option
  3. Development of gas infrastructure is the most critical enabler for transition to a gas-based economy and pipeline androbust LNG infrastructure should be created to act as a facilitator for market developmentand to ensure wider availabilityof gas across all regions
  4. Increasing domestic gas production is critical to build a gas-based economy. Necessary steps should be taken to increase domestic gas production and reduce reliance on LNG imports
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