Strengthening India's LNG Ecosystem: Investigating Collaborative Efforts to Boost LNG Infrastructure

India's economic progress is closely linked to its rising energy needs. As the country moves towards cleaner energy options Liquefied Natural Gas (LNG) has become a strategic fuel source. India is currently the fourth largest importer of LNG globally and this reliance is expected to grow significantly in the future. The increasing dependence on LNG highlights the significance of an established LNG infrastructure in India. This infrastructure includes everything from import terminals that receive LNG shipments to a network of pipelines that distribute fuel to power plants, industries, and city gas networks. Despite the promising outlook, India's existing LNG facilities face numerous obstacles that limit their ability to fully benefit from this green energy source. This blog post will discuss these challenges and explore how collaboration among stakeholders can enhance India's LNG ecosystem, paving the way for an efficient energy landscape.

India's LNG landscape

India's journey with LNG has been a transformative one. Currently, it stands as the fourth largest importer of LNG globally, highlighting its increasing reliance on this eco-friendly fuel. This dependence is projected to grow in the future due to several factors.

• A shift in fuel dynamics
  • India has set goals to achieve net zero emissions by 2070, highlighting the importance of long-term fuel diversification strategies in reaching this target. The country is undertaking initiatives to transition away from coal-powered electricity production due to environmental concerns. LNG is being considered as an alternative in the medium term because it produces fewer carbon dioxide emissions when burned. The transition to LNG-based electricity generation is anticipated to enhance the country's air quality and promote sustainability.
• Industrial growth on clean fuel
  • India's growing industrial sector requires a reliable and cleaner energy source to support its activities. LNG, known for its lower emissions and effective combustion process, stands out as the ideal option for industrial use. The integration of LNG in the field is in line with India's sustainability targets and the global trend towards eco-friendly energy solutions. By embracing LNG, the industrial sector can play a role in achieving the nation's goals while maintaining an efficient industrial environment. An illustration of this is Greenline, a logistics provider in India, which is transitioning its truck fleet to operate on LNG. This action by Greenline aligns with India's efforts to promote sustainable logistics and transportation solutions, thereby promoting the adoption of LNG in the sector.
• City gas distribution
  • The rapid growth of urbanization in India requires expansion of the city gas distribution networks. Piped natural gas, which is supplied through these networks, presents an easier and cleaner option than cooking fuels. The government is focusing on the development of city gas distribution infrastructure to ensure that all households have easy access to clean and effective energy sources. This effort not only tackles environmental concerns but also improves the living standards of city dwellers by providing a safer and more dependable cooking fuel choice.

India’s LNG import over the years

India has steadily increased its imports of LNG over the decade demonstrating a growing reliance, on this cleaner energy option. Starting at 13.3 million tonnes in 2014-15 the imports have consistently risen, peaking at 25.1 million tonnes in 2020-21. While there was a dip to 23.4 million tonnes in 2021-22 and down to 19.9 million tonnes in 2022-23, the number for 2023- 24 stands at 23.3 million tonnes indicating a resurgence in growth. This uptrend in LNG imports underscores India's commitment to transitioning towards energy sources as it actively pursues its sustainability objectives.

Source- Petroleum Planning & Analysis cell

The challenge: Bridging the infrastructure gap

India's ambitious goal to achieve a 15% share of gas in its energy mix by 2030 heavily relies on expanding and modernizing its LNG infrastructure. Currently, the country has a limited number of LNG terminals, with a regasification capacity of 42 million tons per year (MTPA) which falls short of the projected demand of 70 MTPA by 2030. As India moves towards sustainable development and economic growth, the role of liquefied natural gas (LNG) in the nation's energy sector has grown significantly. LNG is valued for its ability to lower carbon emissions and diversify India's energy sources making it a key player in moving towards an eco-friendly future. However, to fully leverage the advantages that LNG offers, India must tackle the challenge of bridging the gap in its LNG infrastructure.

• Understanding the bottlenecks
  • Limited Import Capacity
    • The current LNG import facilities are under strain, causing congestion and longer wait times for LNG vessels. This situation can affect the efficiency and cost effectiveness of LNG imports overall.
  • Inadequate Pipeline Network
    • The pipeline network that is used to move LNG from terminals to areas of its application is not well established. This hinders the distribution and availability of LNG throughout the nation, especially in isolated regions.
  • Storage Constraints
    • Limited storage capacity for LNG makes India vulnerable to price fluctuations in the global LNG market. Strategic storage reserves could help mitigate this risk and provide greater flexibility in managing supply.

• India's current LNG infrastructure and development plans

India's energy landscape is undergoing a significant transformation, with Liquefied Natural Gas (LNG) playing a critical role. While the country boasts a growing natural gas pipeline network (currently around 13,000 km), it lags behind developed nations, but ambitious development plans are underway to bridge this gap and ensure wider LNG accessibility. India's existing pipeline infrastructure, primarily owned by GAIL, GSPL, RGTIL, GGCL, and AGCL, has a design capacity of around 337 million metric standard cubic meters per day (MMSCMD), and this network is projected to more than double in length (reaching 28,000 km) and capacity (reaching 721 MMSCMD) within the next 5-6 years, signifying a crucial step towards a National Gas Grid, connecting major demand and supply centers across India. Despite the growth, the current network faces limitations, which GAIL is actively addressing through expansion and upgrades, and India's future LNG infrastructure plans are promising, with projections suggesting a network of around 32,727 km with a design capacity of 815 MMSCMD by 2030, indicating a substantial improvement in gas transportation potential and a commitment to a cleaner and more secure energy future.

• Driving adoption through innovative initiatives

Indian companies are at the forefront of promoting the adoption of LNG in various industries through many initiatives. For example, Essar is actively reducing carbon emissions in transportation by establishing LNG refueling stations and introducing LNG-powered trucks. Meanwhile Mahanagar Gas Limited has teamed up with Baidyanath LNG to advance small-scale LNG infrastructure development in India. This partnership seeks to improve LNG accessibility in regions and encourage the shift, towards this eco-friendly fuel.

Building a stronger ecosystem: The power of collaboration

India’s increasing reliance on Liquefied Natural Gas (LNG) underscores the importance of an airtight framework. Establishing this structure relies on collaboration among the various stakeholders. The government plays a massive role by creating policies that incentivize firms to invest in essential infrastructure like import terminals, pipelines, and storage facilities. Simplifying regulations and backing research institutions into solutions such as small-scale LNG facilities are also governmental priorities. Collaboration between energy companies and private entities is crucial as well. Private firms bring expertise and funding to develop infrastructure while established energy corporations can work together on initiatives to expand LNG usage, like city gas distribution networks.

Financial institutions are another crucial piece of the puzzle. They offer competitive financing options and help manage risks associated with infrastructure development. By collaborating, these parties can bring about various advantages such as quicker infrastructure development, improved efficiency, and cost savings along the LNG value chain. This cooperative mindset is already gaining traction. Recent endeavors like the Adani INOX partnership for infrastructure development highlight the promise of public-private partnerships (PPPs) in driving progress forward. This collective approach involving government, private sector, and financial institutions will be key to India’s success in unleashing LNG’s potential. A strong LNG ecosystem founded on collaboration will set a path, for a future – one that emphasizes clean energy security, environmental sustainability, and sustained economic growth.

Conclusion

India's progress in establishing an LNG ecosystem relies on the collaboration among the government, private sector, and financial organisations. By developing infrastructure, simplifying regulations and encouraging innovation, India can fully leverage LNG as a more environment-friendly fuel option. This joint effort sets the stage for a future that is energy secure, sustainable through limited dependence on fuels and aligns with the country’s economic advancement. As India charts its course in the LNG landscape, creating an appropriate environment will be crucial in unlocking a more promising future.