NEW DELHI, Dec. 6 (UPI) -- An Indian government-backed report has predicted the country will have surplus gas in the next two years and its fast-growing economy is likely to be dominated by the natural fuel following major oil and gas discoveries by state-run and private energy companies.
"The major natural gas recoveries off the east coast and aggressive acquisition of oil and gas blocks overseas might make India a gas-surplus country in another two years and the natural fuel is all set to replace the country's agrarian-based economy," said a report from the Petroleum and Natural Gas Ministry.
It said the planned cross-country gas pipeline and city gas-distribution networks will go a long way toward influencing India's economy.
The Petroleum Ministry had set up an expert group to study the prospects of gas supply and production in the country.
The government-controlled Gas Authority of India Ltd. has plans to set up a national gas grid while private energy major Reliance Industries Ltd., as part of its ambitious plans, is laying pipelines to bring gas from the coast of southern Andhra Pradesh state to Mangalore in the south, Jamnagar in the west and Dadri in the north. This pipeline will connect cities along the way and will help reduce gas shortage in the country.
Since the government opened the energy sector to private participation, several global and domestic players have applied for gas distribution in Indian cities. Reliance has emerged as biggest domestic player and has applied for gas distribution licenses in 100 cities. The company said its gas to consumers will cost 30 percent less than gas sold by state-owned utilities. This move is set to create cutthroat competition among the players, as other private majors have also planned similar moves.
India has not yet planned gas-based power projects though the power and fertilizer sectors account for 80 percent of country's gas demand for the next five years; existing power projects have been stranded due to a shortage of gas. The Indian government's priority is gas to households and the automobile sector. The private majors have stayed away from setting up power and fertilizer plants as both sector are running at a loss.
"Why the country's private major is more interested in city gas distribution is because it is more profitable and not payment risky than the power and fertilizer projects," said D.S. Rawat, an energy analyst. "Consumers have to make payments on time or their supply will be cut."
With the price of international crude oil high, India's automobile sector has shown interest in opting for gas replacing petrol, the price of which increases every two to three months. The ministry report said that in another five years, almost all commercial vehicles in the country would switch over to compressed natural gas, which is a cheaper alternative to petrol.
The government is making an all-out effort to cut the huge oil and gas bill, which affect the country's annual budget and has become a stumbling block in India's long-cherished dream of achieving double-digit growth.
"Rising fuel bill has shaved 1 percent of India's gross domestic product," said Finance Minister P. Chidambaram recently.
India, which meets 70 percent of its gas and oil requirements through imports, has emphasized increasing domestic production and acquiring equity stakes in oil and gas blocks overseas. The major portion of country's oil and gas imports is from the Middle East, but it has now started looking at Central Asian, African and Latin American countries as alternative resources.
The Petroleum and Natural Gas Ministry asked private gas companies to refrain from making announcements about oil and gas recoveries, saying they were price sensitive and needed to be regulated.
"Announcements of oil and gas discoveries are price sensitive information from the stock market perspective and need to be regulated," said Sukumar Shah, an energy expert.
India's director general of hydrocarbons in May issued guidelines on the issue, under which any find has first to be reported to the government and the managing committee of the respective field. The company can make it public only after a detailed technical analysis is done on the data by the DGH.
It implies the government is not convinced about all the claims of gas finds and wanted to tread carefully. Moreover, there has been conflicting news on the size of the reserves in the Kaveri-Godavari basin off the Andhra Pradesh coast. The gas was first discovered in the basin in 2002. Reliance claimed it had found 14 trillion cubic feet of gas while the international reservoir consultants DeGolyer & McNaughton said the find was closer to 8.5 tcf.
--
(Comments to [email protected])
