Rising Demand to Drive LNG, City Gas Expansion As Domestic Output Slows: Gail India

India’s domestic gas production is expected to decline by at least 20 per cent over the next five years, even as demand for city gas continues to grow, said Sumit Kishore, Executive Director (Marketing), GAIL (India), in his keynote address at a recent industry conference.

“Domestic production will go down. And once the domestic production goes down, it is very important and imperative for the industry to find what will be the price of the city gas, of the city energy,” Kishore said, noting that current production is largely dependent on 30–35-year-old mature fields that need heavy investment and advanced technology to remain productive.

Reflecting on his early involvement with the Prime Minister Ujjwala Yojana nine years ago, Kishore said he could “see the sparkle in their eyes and the expectation from this government” when rural households first shifted from firewood to clean cooking fuel. He drew a parallel with the present demand for city gas networks, saying: “Whenever the Prime Minister has said they want the city gas, now I can correlate what kind of thing people in those hinterlands are expecting.”

Kishore underlined three immediate challenges for the sector — falling domestic supply, scaling up CNG and PNG consumption, and the looming issue of gas pricing. “The era of $6.75 or $7 gas, though it is serving a purpose as of now, it is not going to remain so… What would it be? Definitely, we should try to find out if it should be less than $11 per mmBtu. But where should it settle? That is the part of the story,” he said.

Currently, nearly half of India’s domestic gas allocation goes to the city gas sector, with fertilisers, power and industry taking the rest. But Kishore cautioned operators and policymakers to prepare for costlier gas in the future.

Despite the grim outlook, Kishore stressed that India still holds untapped reserves. “We still have huge reserves of gas available, even oil. For a grid like Mumbai High, we have nearly 25–29 per cent, and we can go another 15–20 per cent up. But to produce that gas, we require new industries and a permanent price,” he said.

Kishore concluded that while LNG imports will play a role, domestic output must remain viable. “LNG is fine, but just that much quantity,” he remarked.