Gas Based Economy - Natural Gas Sector of India

Mains Marks Booster     5th August 2023        

The Ministry of Petroleum & Natural Gas in India has taken a significant step to enhance gas infrastructure activities in the country. They have introduced the National Dossiers and Draft City Gas Distribution (CGD) Policy for states. Under the Petroleum and Natural Gas Regulatory Board (PNGRB), the Prime Minister has initiated the ninth bidding for city gas distribution (CGD) projects.

  • Definition: Natural gas is primarily composed of methane and is a fossil fuel source. It is commonly found alongside other fossil fuels such as coal beds and is naturally produced by methanogenic organisms in environments like bogs, landfills, and marshes.
  • Conversion and By-products: Natural gas undergoes processing to become a cleaner fuel for consumption. During the processing, several by-products like propane, ethane, butane, carbon dioxide, and nitrogen are extracted, which have further applications.
  • India's Energy Mix and Goals: India is the world's third-largest energy consumer, with coal and oil dominating its energy mix. Natural gas accounted for only 6.2% of India's total primary energy supply in 2016.
  • The government aims to increase the share of gas in the primary energy mix to 15% by 2022.
  • Gas Consumption and Sectors in India.
Gas Based Economy - Natural Gas Sector of India

Advantages of Natural Gas

  • Energy Efficiency: Natural gas has a higher energy output compared to other fossil fuels.
  • Reduced Health Risks: Natural gas is a cleaner and safer fuel compared to coal and liquid fuels, contributing to improved air quality.
  • Economic Cost Optimization: Natural gas (CNG) is more cost-effective than petrol and diesel, saving space without the need for cylinder storage.
  • Meeting Global Commitments: India committed to reducing carbon emissions by 33%-35% of 2005 levels by 2030 under the COP21 Paris Convention.
  • Climate Sustainability: Natural gas can significantly reduce carbon emissions in various sectors like domestic kitchens, transportation, and industries.
  • Relatively Convenient: Natural gas is supplied through pipelines, eliminating the need for cylinder storage and saving space.
  • Wide-Ranging Applications: Natural gas can be used for power generation, city gas distribution, transportation, fertilizer production, and petrochemical industries. 

Gas Supply in India

  • Domestic Gas Sources: Gas is sourced from oil & gas fields in western and southeastern regions and the North East Region (Assam & Tripura).
  • Import of Liquefied Natural Gas (LNG): LNG is imported through terminals in Gujarat, Maharashtra, and Kerala, with two more under construction in Tamil Nadu and Odisha. 

Major Gas Pipeline Projects

  • Jagdishpur – Haldia/Bokaro – Dhamra Pipeline Project (JHBDPL) & Barauni- Guwahati Pipeline project (BGPL): Supports the revival of fertilizer plants and ensures gas supply to various regions.
  • North East Region (NER) Gas Grid: A joint venture to develop trunk pipeline connectivity in North Eastern States.
  • Kochi-Koottanad- Bangalore-Mangalore (Ph-II) Pipeline Project (KKBMPL): Connects the new Ennore LNG Terminal with demand centers in the region.
  • Ennore-Thiruvallur-Bangalore-Nagapattinum– Madurai – Tuticorin Natural gas pipeline (ETBNMTPL): Links Ennore LNG Terminal with demand centers. 

Government Initiatives

  • Draft CGD Policy: Released by the Ministry of Petroleum and Natural Gas to facilitate the implementation of CGD networks and value-added services in states.
  • CNG/LNG as Preferred Fuel in Public Transportation: Encouraging state transport corporations to prioritize CNG/LNG buses to promote cleaner fuel usage.
  • $60bn Investment Plan: Significant investment in gas pipeline and terminal infrastructure.
  • National Gas Grid: Aims to remove regional imbalance, connect gas sources to demand centers, and develop CGD networks.
  • Urja Ganga Project: Gas pipeline project by GAIL to transport gas to various regions.
  • Initiatives for Energy Security: Bio-CNG policy, SATAT initiative, and policy guidelines for exploration and exploitation of unconventional hydrocarbons.
  • Regulatory Framework Enhancement: PNGRB's role in granting authorization for CGD networks to expand coverage and ensure availability of CNG/PNG. 


  • Energy Trilemma and Declining Index Ranking: India's energy trilemma index ranking has declined consistently since 2000, mainly due to reduced energy storage, limited diversity in primary energy supply, and increased import dependency.
  • Global Oil Market Vulnerability: The global oil market remains vulnerable to various risks, including natural disasters, technical accidents, and geopolitical tensions, impacting India's energy security.
  • Low Investments in Gas Infrastructure: The private sector has shown limited interest in investing in gas pipelines in India due to uncertainty over availability and the domestic market's capacity to absorb expensive imported gas.
  • Cooperative Federalism Challenges: Pipeline laying has faced obstacles due to land acquisition issues and unviable routes proposed by state governments, leading to major project delays.
  • High Import Dependency: Insufficient domestic gas production, particularly from KG gas-fields, has made India heavily reliant on gas imports, especially from Qatar.
  • Underutilization of Gas-Based Power Capacity: More than half of the natural gas-based power capacity remains idle due to a lack of domestic gas supply, hindering the transformation of India's economy to a gas-based one.
  • Environmental Concerns: Offshore drilling operations pose environmental risks, including harm to marine life, contamination of water, and the potential for oil spills. 

Way Forward

  • Diversify Import Sources: India should explore emerging gas production centers in Africa, the Middle East, Southeast Asia, and the Gulf to diversify its gas imports and ensure a robust and secure natural gas strategy.
  • Integrated Energy Policy Implementation: Consolidate various ministries into a single Ministry of Energy and Environment to enhance energy independence, increase access to affordable energy, promote sustainability, and drive economic growth.
  • Promote Domestic Gas Production: Utilize advanced drilling techniques and establish large-scale import partnerships to develop indigenous gas resources and reduce reliance on imports.
  • Viability Gap Funding: Encourage projects through viability gap funding to attract private sector participation, address shortcomings, and improve project efficiencies.
  • Pricing Reforms: Bring natural gas under the Goods and Services Tax (GST) regime, treat it at par with coal, and consider customs duty waivers on liquefied natural gas (LNG) to boost its affordability and usage.
  • Sector-Specific EIA Manual: Develop a specialized Environmental Impact Assessment (EIA) manual for exploring and producing unconventional hydrocarbon resources to effectively address environmental concerns.
  • Enhance Infrastructure and Security Measures: Invest in the development of adequate gas infrastructure, improve security measures in the oil and gas sector, and strengthen international partnerships to ensure a stable and secure energy supply. 


India's hydrocarbon policy and initiatives reflect its commitment to a cleaner and more sustainable energy future. By addressing challenges and implementing strategic measures, India can accelerate its transition towards a gas-based economy while ensuring energy security and environmental sustainability.

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