Market Trends of India Natural Gas Industry
This section covers the major market trends shaping the India Natural Gas Market according to our research experts:
Piped Natural Gas (PNG) to Grow Significantly
- Under the Petroleum and Natural Gas Regulatory Board (PNGRB) Act 2006, PNGRB grants authorization to the entities for developing a City Gas Distribution (CGD) network (including PNG network) in a specified Geographical Area (GA) of the country. These entities have become the bulwark of the growing PNG sector in the country.
- In April 2022, Petroleum and Natural Gas Regulatory Board (PNGRB), in its 111th board meeting, approved the issuance of letters of intent (LoI) to the three successful entities for retailing compressed natural gas (CNG) to automobiles and piped natural gas (PNG) to households in five geographical areas (GAs), spread over 27 districts in five states.
- Further, increasing the distribution range and creating a gas-based economy is crucial for the government's "Atmanirbhar Bharat" program. Work is being done in the direction of 'One Nation, One Gas Grid.' This refers to integrating these regional grids and establishing a National Grid to provide gas to various stakeholders.
- Natural gas consumption in the country has been increasing yearly, even during the pandemic. It is estimated to be around 56.9 billion cubic meters in 2020, rising from 59.3 bcm in 2019.
- The pipeline grid is expected to help improve clean energy access and aid in developing city gas projects. Thereby aiding the growth of the piped natural gas market.
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Increasing Investment in Pipelines to Drive the Market
- The pipeline is the most economical way of transporting natural gas over a long distance, and this is expected to increase due to rising investments in upcoming pipelines.
- In 2022, the Prime Minister of India announced that work is on to set up 16,000 km of new gas pipeline network in the country, and it is likely to be completed over the next four to six years.
- As of 2021, the Gas Authority of India Ltd (GAIL) had the largest share of the country's natural gas pipeline network, i.e., approximately 32,718 km.
- Moreover, the Indian government has an approved plan of USD 774 million for a natural gas pipeline in the northeast region as part of a national gas grid being built to span remote locations in the country. The 1,656 km pipeline is expected to cost up to INR 92.65 billion and will be completed by 2023.
- Natural gas consumption in the country has increased yearly, even during the pandemic. It is estimated to be around 23.8 billion cubic meters in 2020, rising from 26.9 bcm in 2019.
- Hence, increasing investments in the midstream sector have driven the Indian natural gas market. Pipeline coverage is expected to increase substantially during the forecast period, with the petroleum product pipeline expected to increase the most in the segment.
