NGV India Summit 2016: ENGIE's 'LNG to Delhi' Concept
Conditions in India are favourable for LNG to succeed as transport fuel and the only thing that the sector needs is proper implementation of ideas. This was the message that French major ENGIE delivered during the NGV India Summit held in New Delhi on July 14-15.
Natural Gas Vehicle (NGV) program is now close to two decades old in India. The 1990s witnessed relentless campaign to improve local air quality. This led the Supreme Court of India in 1995 to mandate the switch over to natural gas and resulted in installation of a body called The Environmental Pollution (Prevention and Control) Authority. Subsequent, in 2001 the body recommended the use of Compressed Natural Gas (CNG) among users and paved way for India’s first large scale CNG program in New Delhi. Since then India has seen significant growth of NGV population with more than 2.8 million vehicles now on the roads.
Although first generation CNG program in Delhi as well as Mumbai resulted in apparent benefits, time is right for next generation of gas program as environment debate has again started grabbing headlines in the country. It was precisely in this context that ENGIE presented its concept ‘LNG to Delhi’ at the summit. The idea is to develop LNG fueling stations along Mundra-Delhi corridor for heavy-duty vehicles. The plan envisages four LNG stations, one every 400 km. Stakeholders would be authorities, transporters, industrials, energy suppliers and truck manufacturers.
“The genesis of ‘LNG to Delhi’ concept lies in the debate revolving around pollution in Delhi. LNG-fuelled trucks can easily ply inside Delhi, where currently no diesel trucks are allowed. The Mundra-Delhi corridor at 1200 km is long enough for this concept to be put into practice. We are ready to work with various stakeholders,” ENGIE’s Maneesh Varma, who is Senior Vice President, Business Development in India told Natural Gas Asia.
ENGIE believes it can leverage its European experience where it is partner to the ‘LNG Blue Corridors’ project. The French major has developed three LNG stations for the project, two of which are operational since 2015 (South of Paris, South of France) and one is under development. Five other LNG stations are being developed by ENGIE under the ‘Connecting Europe Facility’ to link France, Germany and The Netherlands.
Conditions right for widespread use of LNG as transport fuel
Ovarith Troeung, Business Development Executive, Green Mobility, Decentralized Solutions for Cities and Regions, ENGIE said conditions in India at the moment are right for expansion in demand for LNG in transportation sector. “India has everything. LNG terminals as well as large consumer base. Only thing that is needed is proper implementation which can happen if government facilitates the process by adequate legislation and regulatory framework,” Troeung, who is based in Paris, told Natural Gas Asia.
Till about three years ago, Europe did not have many LNG stations but growth in numbers has been fast. Troeung believes this can happen in India as well if government legislation provides structure to the industry so that stakeholders such as consumers, vehicle manufacturers, energy suppliers and authorities can put in a collective effort.
India currently has four LNG terminals with close to 22 million metric tons/year of re-gasification capacity. Oil ministry expects country’s LNG import terminal capacity to double in next six years. According to a document released by the ministry on June 3, country’s LNG terminal capacity will likely rise to 47.5mn mt/yr by 2022. Currently, there are four LNG terminals at Dahej and Hazira in Gujarat, Dabhol in Maharashtra and Kochi in the state of Kerala. Capacity expansion of Dahej LNG terminal is expected from 10mn mt/yr to 15mn mt/yr by end of 2016. Further, a firm plan is in place to add another 2.5mn mt/yr at Dahej.
Space for both CNG and LNG
Despite the fact that CNG sector in India has grown rapidly since its take off in early part of this century and has attained a certain level of maturity, it is still plagued by severe infrastructural problems. An important reason why CNG use has not spread beyond tier one and tier two cities. At about 15,000 km, the pipeline grid is insufficient to reach wider pockets of a country of India’s size. Although, further expansion in the network is in progress, the pace continues to be slow due to reasons such as cumbersome land acquisition process.
Varma said that this vacuum can be filled by LNG which can be supplied by trucks to the final consumer. “Just do not talk about gas grid as there are other ways available to transport gas as well. I believe India will see growth in both CNG and LNG. On one hand pipeline network can expand and on the other hand LNG can be supplied to areas not connected with pipeline. What we call virtual LNG pipeline,” he said.
Last month, Petronet LNG said it is looking to sell about 1.5mn mt/yr in India by transporting it via trucks to customers not connected by pipelines. Initially, Petronet would deploy the trucks from Kochi to Mangalore. This is primarily because its 5mn mt/yr re-gasification terminal at Kochi remains underutilised at mere 5% capacity due to lack of pipeline connectivity.
With projection that LNG prices will remain benign in medium to long term, Varma believes this would be the right time for Indian government to devise a full-fledged plan for adoption of LNG as transport fuel. He said ENGIE is ready to work with various stakeholders in developing the requisite plan.
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