Regional Focus: India leaps forward on natural gas infrastructure
The operator of Europe’s largest natural gas transmission network is working to invest in the Indian gas pipeline business. Executives at Italy’s Snam are working with India’s Ministry of Petroleum and Natural Gas, as well as other Indian government officials, regulators and industrial executives to explore the full scope of investment opportunities. Negotiations include several categories: hydrogen (H2) fuel, gas storage and small-scale liquefaction technologies.
Influx of interest. In late 2020, Snam set up a partnership with Indian infrastructure and energy group Adani to develop an H2 business in India and abroad, and to use biogas for low-carbon transport projects. Snam has also signed an agreement with state-owned energy giant Indian Oil Corp. Ltd. (IOCL) for collaboration on energy transition projects, including gas storage and regasification.
Furthermore, Snam has struck a deal with Indian renewable energy company Greenko to research the production of electrolyzer-produced H2. Under the agreement, the two companies will collaborate on the study of H2 production using renewable power, on the design of H2-ready infrastructure and on applications for both industry and transport, including fuel cell mobility.
Snam CEO, Marco Alverà, commented on the deals, “We have the opportunity to bring a valuable contribution to a country that is strongly committed to the energy transition and which presents many opportunities. These agreements aim at promoting the growth of green hydrogen in India and other countries to help decarbonize industry and transport and at further developing natural gas and hydrogen mobility in a huge market.”
At present, Snam operates businesses in Italy, the UK, France, Austria, Greece and China. The company plans to use its deep gas sector knowledge to propel itself into the Indian marketplace. “The significant push toward cleaner energy shift and toward gas is what makes the country interesting for Snam. This will require infrastructures and an integrated management of those infrastructures,” Alverà said.
“Snam is also working on an innovative modular approach to liquefaction that would enable liquefaction of gas at very competitive costs to foster city gas distribution and to monetize local stranded gas reserves,” Alverà said. Many of India’s small gas fields are not yet connected by pipeline, but inexpensive liquefaction facilities could help monetize this gas for transport and other uses.
Indian government pushes for gas expansion. State-owned IOCL operates a 13,391-km network of crude oil, natural gas and product pipelines, with a capacity of 1.896 MMbpd of oil and 9.5 MMsm3d of natural gas. This capacity accounts for approximately 30% of the nation’s total pipeline network. The nation’s top three companies—IOCL, Hindustan Petroleum Corp. Ltd. (HPCL) and Bharat Petroleum Corp. Ltd. (BPCL)—contribute more than 80% of the total length of the gas pipeline network in the country.
Last year, India’s central government announced a plan to invest $9.97 B to expand the gas pipeline network across the country. Even with the COVID-19 pandemic’s dampening effect on the national economy, experts inside the government and the private sector believe that India’s consumption of natural gas will increase more than three-fold over the next 10 yr, making the investments essential.
LNG regasification has become another national priority. H-Energy is a Mumbai-based, private firm that plans to invest $540.6 MM to build LNG terminals and lay down a 60-km pipeline. In 2018, H-Energy inaugurated India’s first FSRU-based LNG regasification terminal at Jaigarh Port in Maharashtra.
Overall, India’s Ministry of Petroleum and Natural Gas is targeting $100 B of investment in gas infrastructure by 2022.
Investment to support growing demand. India’s energy demand is expected to double to 1,516 MM tons of oil equivalent (MMtoe) by 2035, from a total of 753.7 MMtoe in 2017. Furthermore, India’s share in global primary energy consumption is projected to increase two-fold by 2035. LNG imports account for approximately 25% of the country’s total natural gas demand, which is expected to double over the next 5 yr. To meet this rising demand for gas, the government wants to increase its LNG import capacity to 50 MMt.
To encourage greater capital flows into natural gas and oil, India’s government allows 100% foreign direct investment (FDI) in upstream and private-sector refining projects. The FDI limit for public-sector refining projects was raised to 49% without any disinvestment or dilution of domestic equity in existing state-owned entities. The government previously approved fiscal incentives in 2018 to attract investments and technologies to improve the productivity of the country’s oil and gas fields. When it enacted these measures, the Ministry of Petroleum and Natural Gas forecast hydrocarbon production worth $745.8 B over the next 20 yr. GP
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GORDON FELLER has been writing about energy, particularly oil and gas, since his first magazine article was published in 1978, and he has been published in more than 50 industry magazines. He has undertaken numerous research and writing projects for large institutions, including the World Economic Forum, the World Bank, and the governments of Germany, the UAE (Abu Dhabi), Japan and Canada. He has also won more than two dozen competitive fellowships. Mr. Feller graduated with a master’s degree from Columbia University in New York City, New York.
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