With conventional energy resources depleting every passing minute and India battling to meet its ever-growing demands, natural gas just might be the answer. In the next two years natural gas is expected to play a paramount role in power, fertiliser, city gas distribution, steel, refineries and other industrial sectors, thus lessening the dependence on liquid fuel and naphtha.

In 2009-10, the demand for natural gas is expected to be 225 million metric standard cubic metre per day (mmscmd) while supply would be around 168 mmscmd, implying a demand-supply gap of 57 mmscmd. According to a recent Mckinsey report, Gas in 2020: A Perspective, ?Demand for gas in India would surge by 9-10% annually to about 115 to 135 billion cubic meter (BCM) by 2020.? To meet its peak power deficit of about 140 gigawatts (gw) in 2017, India will need to build 55 gw of additional peaking capacity. Hydro electricity can satisfy 20-30 gw of peak power demand by 2017 with alternatives like natural gas filling this gap. However, current projects indicate that indigenous production would increase to 55 BCM by 2012. But in the longer term, indigenous natural gas alone may not be able to fulfill the country?s consumption needs and pipelines would play an important role.

Experts opine that poor gas transportation infrastructure has been a major hurdle in the development of a full natural gas market in India. The finance minister?s proposal to develop a blueprint for long-distance gas highway leading to a National Gas Grid is quite important, especially when the country can expect more gas from exploratory fields of RIL, ONGC, Cairns, and GSPC. According to Akhil Sambar, senior manager, Ernst & Young, ?The government could look at public private partnership model for putting together the proposed gas grid. This is all the more important when there is a liquidity crunch. IIFCL can also play a major role in financing the gas grid project.?

The government can also ease the pressure by exploring the options of transnational gas supply. The Iran-Pakistan-India (IPI) project (32 BCM) and Myanmar-India pipeline (12 BCM) could provide 40 to 45 BCM of gas. Any further delay in the pipeline projects would increase LNG imports between 40 to 90 BCM by 2020. ?Procurement of gas from Myanmar can be taken up on a priority basis,? Sambar says. And this will be important especially with the implementation of IPI and Turkmenistan-Afghanistan-Pakistan-India pipeline projects.