India is making plans to establish a strategic natural gas reserve that can store up to four billion cubic metres of imported gas. This will serve as a backup in case of supply emergencies and help stabilize the domestic people familiar with the incident, told a media agency.
In the past, India has considered building a strategic gas storage facility as part of its energy security plan but was deterred due to the enormous costs involved. However, the recent disruption in the global gas market due to geopolitical factors has prompted a re-evaluation of this policy.
Companies and Target Involved
The decision to set up a gas reserve was given a green signal by oil minister Hardeep Singh Puri, who directed Oil and National Gas Corporation, Oil India Limited (OIL) and GAIL (Gas Authority of India Limited) to prepare a detailed feasibility report. The targeted gas storage facility is 3-4BCM and is estimated to cost 1-2 billion dollars. India’s aim is to increase the share of gas in its energy mix to 15 per cent by 2030 and 6 per cent currently.
To achieve this, developing a robust domestic energy market with large storage capacity, a well-connected pipeline network, and a major natural gas exchange is crucial. Additionally, having a large gas storage facility will position India as the leading regional hub and enable it to supply neighbouring countries such as Sri Lanka, Bangladesh, and Myanmar in the future.
Pushing for Gas Based Economy
The feasibility report, which will be submitted in three months, will provide cost estimates, potential location, construction timelines and business and financial models for the gas reserves. The source mentioned the potential utilisation of depleted wells from the Oil and Natural Gas Corporation (ONGC) and Oil India for storage purposes. The ONGC has pinpointed two wells in Gujarat, while Oil India is pushing similar initiatives in the North-East Region.
Storage could be strategic, commercial, or a mix of both. The report will further outline the necessary government support for making the project financially viable and address the question of who can invest in the storage facility and how they can recover the investments. As India aims to transition into a gas-based economy, with gas consumption expected to increase, storage will be crucial in managing short-term market challenges.
Currently, India imports about half the gas it consumes. To ensure a supply and meet the growing demand, it is imperative to establish a strategic reserve similar to what major gas-consuming economies like Europe and China have already implemented.