A ‘Pipe’ dream?

Amit Wankhede, General Manager - Upstream Business Affairs, makes a strong case for a national gas grid in India.

Date: 1 September 2016

‘19th Century belonged to Coal, 20th century to Oil while the 21st belongs to Gas’ aptly sums up the global energy trend over the last three hundred years. 

India, quite contradictorily, bends the global trend in that the dominance of coal and oil has continued to rise and rise.

While globally the use of Gas has grown incrementally, contributing a quarter of global energy today, in India its presence is a mere 6% in the energy mix. And if you think that we will catch up soon – don’t hold your breath! The pundits predict that gas is likely to remain a poor laggard crawling precariously with 8% share till 2040, in case of status quo. 

For India’s steadfast economic development, it is incontestable that energy is the growth engine. Environmental and COP21 commitments need clean energy for which renewables, are a partial solution but it will take some time before they become a major component in the energy mix.
For India’s steadfast economic development, it is incontestable that energy is the growth engine. Environmental and COP21 commitments need clean energy for which renewables, are a partial solution but it will take some time before they become a major component in the energy mix.
 
And it is here that Gas provides the right solution as a bridge fuel: it is readily available, abundant, affordable and acceptable as a cleaner fuel.

For India to transition to a Gas-based economy, country-wide accessibility is a major requirement. This would require creating a robust supply and distribution network through a pipeline infrastructure – in other words, a national gas grid.
The national gas grid and pipeline distribution network along smart cities and Make in India initiatives would establish a gas economy for India
What differentiates the success of Dahej and Hazira running over 100% capacity from the initial failure of Cochin is the presence and absence of pipeline connectivity in their respective cases. A CNG taxi driver can ply seamlessly from one city of Gujarat to another due to the existence of CNG Stations connected by pipelines. Think about it - if pipeline connectivity is provided to 50,000 fuel pump stations, it will create an additional revenue stream for dealers and companies alike and give a huge impetus to motorists for opting for CNG vehicles.

While the global prices of gas have slumped and LNG is available at 5$ at the import terminal, the price the end customer pays today is close to an astounding 9 dollars. This is due to the cascading impact of pipeline tariff, taxation, duties and multiple margins. A robust gas grid will ensure that the customer is able to negotiate with multiple suppliers. These suppliers and marketing companies in turn will have the flexibility to secure supplies from different sources and provide gas at optimal price.

The success of shale in USA and benefits of intensive gas usage in Gujarat are built on the foundation of a strong pipeline network.
Public private partnership (PPP), Government financing and other innovative ideas for funding pipeline projects would clear the path for raising funds. Offering equity to State Governments or partial linkage of tariffs to capacity utilization would also pave the way for multiple stakeholder alignment. Land acquisition is a challenge which can be overcome by utilising access to national and state highways, rail network, along exiting oil and water pipelines or land owned by Central government agencies. From 15000 KM currently, the aim should be to double the gas pipeline network to 30000 KM in next 8-10 years. The current low utilization need not be seen as a deterrent for setting a lofty target.

As national highways and railways have created a backbone for development for Indian transportation, optic fibre and transmission tower network have built the telecom industry, the national gas grid and pipeline distribution network along smart cities and Make in India initiatives would establish a gas economy for India.

Then we would not call it a pipe dream!