India must prepare for an imported gas-based regime: PNGRB Chairman

The Petroleum & Natural Gas Regulatory Board (PNGRB) Chairman Anil Jain on Monday said as the demand for natural gas increases in the country, the dynamics will tilt in favour of imports.

India, which consumed 60 billion standard cubic meters (BSCM) of natural gas in FY23, imports around half of its domestic requirement of natural gas.

The PNGRB chief indicated that the ratio could soon tilt in favour of imported gas due to increasing market demands. He was speaking at an event organised by the Federation Of Indian Chambers Of Commerce & Industry.

Drawing parallels with the oil sector reforms in the 1990s, Jain suggested that a similar transition is on the horizon for the gas sector, leading to the dismantling of the administered price mechanism (APM).

He stressed that India must prepare for an imported gas-based regime given the increasing demand for gas and its relative cheapness compared to imported oil. “So there is every reason… gas availability is not a problem, but the markets in India need to amalgamate,” Jain added.

He was also of the view that the persistent dichotomy between domestic and imported gas, which is splitting the market, must be dismantled for the sake of a cohesive natural gas industry.

“I think this dichotomy between domestic gas and imported gas has to go because as long as we keep looking at gas in compartments, it will split the market,” he pointed out.

The PNGRB chief highlighted the potential of 45 million tonnes (mt) of free gas capacity in LNG terminals with only 25 mt coming through, which presents an opportunity for the LNG businesses to integrate with the natural gas industry.

Unified tariffs

On unified tariffs, Jain said it is a way of opening up markets, particularly in areas with difficult accessibility.

The chairperson also stressed on the necessity of infrastructure readiness for the other two segments of CGD — the industry and commercial — signalling the likelihood of a second wave of investments.

“So, I have a feeling that infrastructure will have to ready itself for the other two segments of CGD, the industry and commercial and also in the larger scheme of things,” he added.