Eurasia Review: India Needs More Domestic Gas Supply And Larger Gas Grid

Having indicated his intention to increase gas pipeline network infrastructure by 15,000 kilometers, making it almost double existing capacity, India’s Finance Minister Arun Jaitley has certainly raised an intellectual argument among oil and gas stalwarts: What should be India’s priority – gas or gas grid?

The government’s goal remains addressing carbon emission concerns and reinforcing low carbon growth by hooking the entire country into the gas grid, while meeting growing demand for electricity. These goals look unrealistic in light of India’s current gas situation.

The KG-D6 gas basin, once regarded as India’s largest gas field, is only producing at 16 percent of estimated peak output, pulling down the country’s total gas production.

Consequently, industry experts are pessimistic at the proposition of doubling current gas pipeline infrastructure. Developers will not invest in additional pipeline when existing pipeline is operating at only 50 percent to 55 percent capacity.

A strong gas pipeline infrastructure is a prerequisite for a mature gas market. The inability to find the necessary investment funds raises serious concerns around India’s gas production. MORE