Reforms, infra investment are critical to unlocking India’s next phase of gas demand growth: Report

New Delhi, July 26: India’s long-term natural gas growth will depend not only on expanding LNG import capacity but also on accelerating investment in transmission and distribution infrastructure, gas-intensive industries, and reforms to market design, regulation and pricing, according to a new report of International Gas Union (IGU).
While India has significantly expanded regasification terminal capacity, the pace of investment in midstream infrastructure has lagged, limiting the country’s ability to increase gas consumption. The report argues that reforms to pricing mechanisms and market access will be essential to support sustained growth in gas demand. “The Strait of Hormuz crisis has underlined several import dependencies for India, particularly in gas supply chains. India’s heavy reliance on Gulf-sourced LPGs and LNG, where Qatari exports are the primary source of supply, will bring into question India’s historic reliance on close geographical suppliers that have proven to be vulnerable to disruption. These issues are not insignificant, and the current price shock will also, in the short term, upend the economics of imported gas for Indian power producers, industrial and domestic customers, for as long as it lasts,” it said.
The report said lower wholesale gas prices alone will not be sufficient to drive higher gas consumption. Greater investment in infrastructure, commercial contracting and broader market reforms will also be needed to increase the role of gas in India’s energy mix. (PTI)