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How the gas economy would evolve in India

April 28, 2009 16:39 IST
In March-end, Reliance Industries Ltd (RIL) kicked off supply of gas from its field on the country's coast. Increased availability of gas could drive new usage in the long run. In an e-mailed interview, RIL President & CEO (Petroleum) PMS Prasad shares his insights on how the gas economy would evolve in India.

How do you see the gas market evolving in the country?

As gas production from KG-D6 (block) reaches 80 million cubic metres per day, it would nearly double the availability of gas in India, and almost eliminate the shortfall in gas supplies being faced today by existing gas users. It would reduce wealth transfer from India to other nations due to energy imports, while supply of gas to the core sectors would also bring down subsidy and costs in the fertiliser, power and transportation sectors.

The gas market in India is at an inflection point. The increase in gas supplies would also promote setting up of brownfield and greenfield projects. The customers in Gujarat and along the HBJ (Hazira-Bijaipur-Jagdishpur gas pipeline) receive gas from several sources; they will now also have the choice of receiving gas from KG D6.

Gas infrastructure is being developed rapidly. The East-West Pipeline would take the KG-D6 gas to almost all the major demand centres in India, as it would connect to the existing trunk pipelines as well as regional networks in the west. The city gas sector in India is witnessing lot of interest. With increase in gas supplies and development of pipeline infrastructure, the gas markets would develop further.

Will increased supply drive new usage of gas?

The power and the fertiliser sectors have been a significant consumer of gas and will continue to be so. But as gas supplies increase, the demand and supply to other sectors like refining, petrochemicals, steel and city gas projects would increase. There is a large unmet demand for power in India today which will also promote usage of gas for generation of distributed power.

How is the supply and demand of gas likely to increase in the next 2-3 years?

The current gas supply in India is around 110 mmscmd and the demand is nearly 200 mmscmd. This gap can be met through KG-D6 gas. Supply of gas to existing industries will unlock some latent demand through debottlenecking and brownfield expansions. Besides, city gas, CNG and distributed power sectors would consume additional gas as they develop. All these would increase the demand for gas by another 15-20 million cubic metres per day. There would still be a deficit of 20-25 million cubic metres per day in the next 2-3 years.

By when will city gas projects come up? You had big plans...

 The city gas sector is an emerging sector in India, and RIL plans to participate in this sector in a major way, as it helps us reach gas to the people directly. The PNGRB recently concluded bidding for some of the smaller towns, and more towns and cities are expected to come up for bidding in future. RIL would bid in some of the cities.

BS Reporter in Mumbai