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    City Gas to Drive India's Gas Demand Growth: WoodMac


India has successfully concluded the ninth CGD bidding round.

by: Shardul Sharma

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City Gas to Drive India's Gas Demand Growth: WoodMac

India’s city gas distribution (CGD) sector will drive the demand for natural gas in the south Asian nation, according to a Wood Mackenzie note published February 8.

"City gas distribution (CGD) could stimulate gas demand growth given significant latent demand from the domestic, commercial and industrial segments. Nearly $1.3bn in investment can be expected to build the CGD network over the next decade. In our view, CGD will account for a 15% share of the overall gas market, up from the current 7%,” WoodMac’s senior analyst Kaushik Chatterjee said.

The Indian downstream regulator, Petroleum and Natural Gas Regulatory Board (PNGRB), has successfully concluded the ninth CGD bidding round which received very strong response from the industry. During this round 86 areas covering 174 districts in 22 states and union territories were open for bidding. A total of 406 bids were received for the 86 areas; and 35 entities participated in the process. Private sector firm Adani Gas won the highest number of licences.

PNGRB is also in the process of awarding licences under the 10th round which was launched in November last year. It has received 225 bids for the 50 geographical areas on offer in the 10th CGD bidding round and the winners will be finalised by end-February.

According to Chatterjee expansion in India’s pipeline grid will boost access to gas.

“Completion of the Urja Ganga gas pipeline project will be a significant step forward in expanding access to gas. The 2,540-km pipeline will connect several cities stretching from Uttar Pradesh to Odisha, and extend to the remote northeastern region of India by another 750 km. We expect the first phase of the project to be completed in early 2019,” he said.

Although, demand for gas looks strong in the CGD sector, India’s regasification capabilities may pose a challenge as commissioning of import terminals have been delayed due to various reasons.  

"The Jaigarh FSRU, Mundra and Ennore terminals were not commissioned as expected in 2018, reducing expectations of demand in the later part of the year. The Jaigarh and Ennore projects were postponed due to pipeline construction delays. For Mundra, the delay was a result of a dispute between the terminal owner and port operator on cost sharing. These are now expected to come online in H1 2019. We forecast LNG demand of 25mn mt/yr in 2019, an 8.7% increase over 2018," he said.