India’s Gas Policy Change to Widen LNG’s Reach, Draw New Investors

SEATTLE (Oil Monster): India's decision to ease rules on setting up LNG stations will help expand the fuel's accessibility as well as attract more private investors as the country nurtures a dream to become a gas-based economy, the head of India's oil and gas regulator told S&P Global Platts in an interview.

This decision will help to tap in smaller scale and well as commercial transport sector for LNG use, a step towards boosting gas consumption in India where the share of gas in the energy mix is as low as 6%, compared with a global average of close to 25%, said Dinesh Kumar Sarraf, chairperson of India's Petroleum and Natural Gas Regulatory Board.

"The traditional 'LNG premium over gas' has narrowed down significantly. Therefore, India needs to develop this LNG fuel alternative. We have studied and found out that the City Gas Distribution companies are not necessarily the best bet to develop LNG stations. Therefore, we have opened up the LNG sector," Sarraf said.

Earlier this month, PNGRB issued a notice declaring that LNG stations would be excluded from the purview of CGD exclusivity licenses issued for specific geographical areas. Any entity can set up an LNG station in any geographical area or anywhere else, even if it is not the authorized entity for that area.

According to Platts Analytics, the move would benefit integrated players and could also increase the penetration of LNG in the transport sector.

Commenting on how the LNG-based transport sector -- trucks and buses -- would grow after the recent policy decision, Sarraf drew a comparison, saying currently there were 400,000 LNG trucks in China, an indication that the potential can be huge in India.

"The rationale is that gas is cheaper than high-speed diesel. It's more environment friendly too. But on the issue of how many LNG trucks and buses would come on road, how many LNG stations would come up and how much of LNG would be consumed through this route, it would depend how seriously various industries would take this development," Sarraf said.

"But we can already see that some companies have already initiated action on this. The government has always been supportive of gas as a product," he added.

Courtesy: www.spglobal.com