**2.2 Domestic production**

India's natural gas production has been a cause of concern for the government and the operating companies. The consuming industries, especially the power and fertilizer producers are at the receiving end. The falling natural gas production has severely impacted the power and fertilizer producers. If India continues to produce at the current rate the reserve to production ratio (R/P) suggests that natural gas can last for 56 years. However, the production rate is bound to increase in the future (**Figure 2**), thereby the R/P ratio will fall.

## **2.3 Demand projections**

Petroleum and Natural Gas Regulatory Board (PNGRB), India had commissioned an industry study in 2011 to assess the realistic demand of natural gas by 2029–2030. The purpose was to advise the government about the development of related infrastructure for making the natural gas available, transport, creating re-gasification plants, and supply to various sectors. The industry group submitted

#### **Figure 1.**

*Proven natural gas reserves in India. Source: prepared by the authors using Statistical Review of World Energy 2021.*

*Role of Natural Gas in India: Recent Developments and Future Perspectives DOI: http://dx.doi.org/10.5772/intechopen.101346*

#### **Figure 2.**

*India's domestic natural gas production.*


#### **Table 1.**

*Projected natural gas demand in India [in MMSCMD].*

its report in 2013. PNGRB projected that the demand for natural gas to expand up to 746 million standard cubic meters per day (MMSCMD) (**Table 1**) in 2029–2030 from the actual consumption of 176 MMSCMD in 2010–2011.

## **2.4 Consumption and deficit**

Petroleum Planning and Analysis Cell (PPAC) records suggest that the average consumption of natural gas in the first 4 months of the financial year (FY) 2021– 2022 was around 171 MMSCMD, which was 316 MMSCMD lower than the PNGRB projections. In fact, from the year 2012–2013 till 2020–2021, the trend of consumption of natural gas had been significantly lower than PNGRB's projections. India achieved about 34% of the natural gas demand projections for the FY 2020–2021 compared to 65% achievement in 2012–2013 (**Table 2**). During the said period, consumption of natural gas increased marginally but the actual consumption was markedly lower than the projections. The widening gap between projected demand and actual consumption could be due to sluggish natural gas demand in the industries and transport sector. The reasons for sluggish demand and slow penetration of natural gas could be ascribed to a combination of factors including lower domestic natural gas production, high import price, and infrastructure bottlenecks.

Arguably, the natural gas market development was slower than expectations. The natural gas market development was largely dependent on the ample supply of domestic natural gas at affordable prices [4]. The user of natural gas in power


#### **Table 2.**

*Natural gas consumption in India (MMSCMD).*

plants, fertilizer plants, cement plants, ceramic industries, refineries, and petrochemical plants were expected to strongly drive natural gas market development, which did not happen.

The gas-based power plants expected domestic gas to address their long-standing supply concerns. Unfortunately, falling domestic natural gas production aggravated their pain points. The natural gas consumption by power plants declined from 22,628 MMSCM in 2011–2012 to 11,020 MMSCM in 2019–202020. The share of natural gas consumption by power plants fell from 35% in 2011–2012 to 17% in 2019–20. During the period, natural gas consumption in refineries, fertilizer plants, and the city gas distribution (CGD) network improved (**Figure 3**). The government prioritized natural gas allocation to the CGD network, especially for the domestic and transport segments, which resulted in higher consumption.

It is evident from **Table 2** that domestic supply shrank from approximately 109 MMSCMD in 2012–2013 to 76 MMSCMD. Consequently, during the same period, liquefied natural gas (LNG) import increased from 48 MMSCMD to 90 MMSCMD. LNG import registered 88.5% growth to maintain the share of natural gas and meet rising natural gas demand.

**Figure 3.** *Natural gas consumption by selected sectors in India [5].*

*Role of Natural Gas in India: Recent Developments and Future Perspectives DOI: http://dx.doi.org/10.5772/intechopen.101346*

**Figure 4.** *India's widening natural gas deficit. Source: prepared by the authors using PPAC data [7].*

The higher contribution of natural gas in India's primary energy basket will be severely constrained without boosting demand in the industries, especially power and fertilizer plants. The refineries, petrochemical plants, and CGD network will continue to augment natural gas consumption. CARE Ratings—a leading credit rating agency [6] indicated that higher urea production will foster demand for natural gas. However, the fertilizer plants will need natural gas supply at a competitive price, supply of domestic natural gas will be desirable.

India's natural gas domestic production has been lower than consumption. It is evident from **Figure 4** that natural gas consumption has been fluctuating. The slack domestic natural gas production failed to meet the demand, therefore, the deficit kept widening. So, India's dependence on natural gas imports continued to rise. Due to a lack of import options through a pipeline, India primarily relied on the import of liquefied natural gas (LNG).
