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India to unveil natural gas infrastructure policy

25th July 2016

By: Ajoy K Das

Creamer Media Correspondent

  

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KOLKATA (miningweekly.com) – India’s Oil and Natural Gas Ministry will shortly unveil a national liquefied natural gas (LNG) infrastructure and logistic policy, laying down standards, benchmarks and conditions for domestic and foreign LNG project developers.

Officials familiar with the framing of the new policy have said it is imperative to stipulate guidelines and benchmarks for gas infrastructure investors in order to ensure “uniform, stable and orderly growth” of the sector, given the government’s ambitions to evolve India to a gas-based economy and rising gas imports.

While information on details of the proposed policy are still sketchy, the policy is expected to address key issues, including whether international LNG suppliers will be permitted to invest in gas infrastructure projects in the country.

One view on the way to go for government is that it should set limits for such investors and allow them to invest in gas infrastructure projects through India-specific subsidiaries and not directly through global parent companies, officials have said.

The policy is also likely to set a minimum investment criteria, including a minimum LNG terminal storage project capacity of at least 2.5-million tons a year.

The policy will also aim to protect the interests of third-party users or common carriers in gas terminal and infrastructure projects, and the government could stipulate that a certain percentage of a project capacity be set aside for use by third parties.

Enunciating on the evolution of the sector, Oil and Natural Gas Minister Dharmendra Pradhan recently said that India was gradually shifting towards a sustainable gas economy. “The price should be affordable to us. We respect all long-term contracts and everybody has to appreciate the rapidly changing scenario.”

Natural gas currently accounts for about 8% of the country’s energy needs, while oil accounts for more than a quarter of energy demand.

According to government estimates, the country’s gas supply deficit is expected to widen to 78-million standard cubic metres a day by the end of the current financial year and to escalate to about 117-million standard cubic metres a day by 2021.

On the production side, a new policy – Hydrocarbon Exploration Licensing Policy – has already been put in place, while post production, a new liberalised and flexible regime has been activated giving pricing and marketing freedom to exploration and production companies.

Hence, the new policy on gas infrastructure will be in line with such initiatives that aim to ensure standardisation of projects and investments across all segments of the energy chain, the officials have said.

India’s domestic natural gas production is forecast to increase by 52% by 2025 from 92-million standard cubic metres a day currently. The country’s total regassification capacity is pegged at 25-million tons a year and considering projects already announced and planned, this is expected to increase to 37-million tons a year by 2020 and 55-million tons a year by 2025.

The new policy will address infrastructure requirements in terms of investments and users’ demand in light of such increases in natural gas project capacity, the officials added.

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online

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