The Indian government is evaluating the possibility of establishing a strategic gas reserve as a measure to counteract volatility in natural gas prices and reduce its dependence on imports, in response to the growing demand for natural gas in the country.
To this end, the government has established a committee tasked with carrying out a feasibility study to analyze the need to develop a strategic gas reserve. This study will facilitate a comprehensive evaluation of the technical and economic aspects of the project in early 2024.
In this regard, the Delhi authorities intend to take advantage of old depleted hydrocarbon wells for the implementation of the strategic gas reserve, with the aim of mitigating sharp fluctuations in gas prices.
About India’s Strategic Gas Reserve
India’s attempts to establish a strategic natural gas reserve align with its plans to develop liquefied natural gas (LNG) storage capacity, as part of its broader goal of increasing imports of LNG and prevent supply shortage situations similar to those experienced in 2022.
The construction of the strategic gas reserve is planned to be carried out in a phased manner in the western and northeastern regions of India, with an initial capacity to store up to 4 billion cubic meters (11 million cubic meters per day) of gas.
Construction of the first of these facilities is estimated to take between three and four years after receiving government approval, with an estimated cost in the range of $1 billion to $2 billion.
India’s state-owned enterprises currently retain around 2 billion cubic meters (5.4 million cubic meters per day) of gas stored in pipelines and liquefied natural gas (LNG) storage tanks for commercial purposes.
It should be noted that India already has a strategic crude oil reserve that exceeds 5 million tons. Regarding the second phase strategic petroleum reserves (SPR), which include 6.5 million tonnes at Chandikhol, 4 million tonnes at Odisha and 2.5 million tonnes at Padur, Delhi has been facing challenges for its development, using a public-private partnership model.
It is highly likely that the gas storage reserve will be used to import LNG, as importers have signed long-term agreements, most of which will come into effect from 2026.
Imports are also likely to play a key role in achieving Delhi’s goal of more than doubling the share of natural gas in its energy mix, taking it to 15% by 2030, compared to the current 6%. unless domestic production experiences a substantial increase. It is relevant to highlight that the increase in demand for natural gas in India has also been a driving factor for the increase in national production.
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Source: argusmedia.com
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