After oil, India may now build strategic reserve of natural gas to further strengthen the country's energy security and shield itself from supply disruptions and frequent price fluctuations coming from perennial political risks in the prime energy supplying countries in the Middle East and Africa.
Sources privy to the development said a conductive global energy market where oil and gas prices are stable had given fresh push for building strategic gas reserves in the country. An announcement in this regard may be made as early as in the Budget 2021-22.
The country had already taken advantage of low oil prices in the first quarter of FY21 (April-June) to fill its existing strategic oil reserve, making big savings. And the government now feels that it's time for similar infrastructure for gas.
Spot LNG prices are currently at around $6 per mmBtu (million British thermal unit), though a little higher than early last year, still attractively priced to push the initiative on strategic reserve.
For building strategic gas reserve, the plan is to inject depleted gas fields with fuel or develop storage in large salt caverns.
The plan for strategic gas reserve emerges from an official study that suggests that consumption of natural gas would grow two-fold by 2030, resulting in large gap between demand and domestic production. This would increase imports of gas and take them closer to levels of oil imports, where the country has to depend on overseas supplies to meet over 85 per cent of its domestic consumption demand.
At present, almost half of the domestic consumption of natural gas is met from imports. With the government keen on building a cleaner gas based economy, consumption is set to rise, pushing up imports of LNG.
It is expected that a natural gas reserve would rely more on the private sector to build gas storage capacity. In this regard, depleted oil and gas fields of national oil companies (NoCs) will be offered on competitive basis to interested gas marketeers, both for strategic and commercial storages.
