Unlocking Gas Potential- New Business Models

The session on unlocking gas potentials was an engaging one. The facilitator, Mr. Khera from McKinsey & Company set the context by talking about the current state and future expectation for gas. The panellists included Mr. Prabhat Singh CMD, Petronet LNG, Mr. Omar Mitha Chairman ENH, Mozambique, Mr. S. P. Garg Member PNGRB, Mr. Peter Lambert Senior Expert, Mckinsey & Company, Mr. Kaushik Deb Sr.Fellow, Kapsarc and Mr. Rajiv Mathur ED, GAIL.

Globally gas is an important part of the energy mix. Gas is environment friendly , easy to transport, reliable and a flexible source of energy. Against 15%, India’s gas share of the primary energy mix has fallen to 6.2%. Falling domestic production, economic unviability of RLNG and lack of infrastructure leading to some areas remaining unconnected are the key reasons for this fall. Some positive steps like new upstream policies and gas price pooling for fertilisers have been introduced. The consumption of gas in India could grow at 5% for the next 10-12 years. Shifts in 4 priority sectors of Power, Transportation, Cooking and FO for industries can bolster gas consumption in the country. These can include shifts like half of fleet vehicles running on CNG and half of FO consumption to be replaced by gas.

The panel expressed their optimistic outlook on CGD gas and transport sector consumption. Panelists were excited to talk about LNG as trucking fuel in India and how the major stakeholders can enable this shift with a collaborative approach. Some questions that came up around increasing demand for gas were on the new CGD bids and the speed of implementation for such projects. While Mr. Garg from PNGRB spoke at length about the weightage given to infrastructure setup and how the regulators are trying their best to ensure compliance to quicker infrastructure setup, Mr. Mathur from GAIL also brought in an important point about support being provided by the local authorities especially with approvals. An interesting suggestion was provided by Mr. Singh from Petronet to make authorities and the CGD bidders equal players in the project giving incentives and imposing penalties the same way if projects are delayed. On the supply side there were questions around the first molecule coming to India to which Mr. Mitha from ENH said it could be expected by 2024. Mr. Lambert from McKinsey & Company shared the view that for a price sensitive country like India it would be important to try and lock-in prices in a volatile LNG market to be able to get the economics right. Subsea pipelines for LNG transportation was another topic that came up but the panel believed there wasn’t much potential with most considering it as a supplementary solution. On the topic of LNG in transportation, the common view was that the ecosystem required for OEMs, fleet owners, smaller players, to increase demand isn’t present right now and there is need for more government intervention. Both Mr. Singh and Mr. Mathur voiced their opinion that if the government can support by cutting import duties on imported LNG trucks to allow a pilot in the country then it could encourage the players on the fence to enter the market and help create the ecosystem.

In synthesis, the session reflected the panel’s optimism towards the gas sector with requirements for reforms in power sector tariffs, mandating a share for gas in the energy mix and getting each stakeholder involved to ensure better implementation of projects.

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