With India’s gas production outpacing its crude oil production in 2009-10, the hankering for gas allocation has increased, too, but the lack of adequate gas infrastructure has seen the country losing out on gains from falling international prices. In a six-part series, Business Standard takes a look at the need for adequate infrastructure, even as cities are changing with relatively new gas lifelines.

When the empowered group of ministers (EGoM) on natural gas sits to decide on the fate of applicants seeking a pie of Reliance Industries Ltd’s D6 gas, an important question that may remain unanswered is whether India has done enough to meet the domestic gas demand. Officials say the Ministry of Petroleum and Natural Gas has applications from power and fertiliser sectors that total to a whopping 600 million standard cubic metres a day (mscmd) of demand, of which 28 mscmd alone is being sought by the Anil Ambani group for its four power plants.

This demand is over and above the present requirement of 175 mscmd against a supply of around 140 mscmd. Internationally, natural gas prices have crashed due to the economic slowdown and availability of shale gas in the US market. Imported liquefied natural gas (LNG) in India is now available at a landed price of about $5.5 a million British thermal unit, making the differential between domestic and imported gas a comfortable $1 or so.

Taking advantage of the global glut would have been ideal for India but it has not been able to stitch a new deal with even a stable gas partner like Qatar. A recent delegation to that country attempted to tie up a new contract but could not succeed. The reason: Long-term supply is unavailable in an uncertain market and the Indian market cannot commit to short-term contracts of a year or two, since the country does not have the required gas infrastructure, said a senior official in the ministry. Courtesy: BS