A petrol pump employee fills Compressed Natural Gas at a gas station in Mumbai, India (Photographer: Prashanth Vishwanathan/Bloomberg News)

Smaller Firms Express Interest In Latest City Gas Auctions, PNGRB Says

The ninth round of city gas auctions is seeing enthusiastic response from oil and gas companies, including smaller players.

Besides the big players like GAIL’s subsidiaries and joint venture, and oil marketing companies – Gujarat Gas, GSPC, Adanis, several smaller firms have shown an enthusiastic response, Dinesh Kumar Sarraf, chairman of the Petroleum and Natural Gas Regulatory Board told BloombergQuint in an interview. The regulator expects to start commercialisation of natural gas by October next year.

The government has invited bids for gas permits across 86 cities and districts. The bidding process, which started yesterday, is expected to be completed by July 12. The fields will begin commercial supply by March 2020, Sarraf said.

India, home to cities with the world’s most toxic air, is conducting its largest ever auction to distribute natural gas in more urban areas as it looks to cut emissions by switching to cleaner auto and kitchen fuels. The Narendra Modi government is looking to fast-track expansion of city gas distribution grid to increase the share of natural gas in the kitchen and auto fuels mix from 6 percent to 20 percent by 2030. That would help reduce emissions as part of the global pledge to keep the average increase in temperature below 2-degree celsius.

The response should be heartening for the government, especially since the outcome of the last few auctions were not encouraging, prompting the regulator to revise the bidding norms. The body now aims to nearly double the coverage area of piped-gas connections in India.

Natural gas currently has a share of 6.3 percent in India’s energy basket, lower than the 10.4 percent a few years ago, Sarraf said. “We would like to take it to 15 percent.”

Here are the key highlights from the interaction:

  • Looking to increase share of gas in energy mix to 15 percent.
  • Motive to increase consumption of natural gas.
  • Market players have shown enthusiasm for this auction.
  • Expect the demand in auction to be satisfactory.
  • Expect commercialisation to start within 18 months from October 2018.
  • Have an internal target of awarding areas by October 2018.
  • Have received interest from OMCs, GAIL and many other smaller market players.
  • Hike in gas price is a marginal adjustment.
  • Unified tariff decision to come out in next two months.
  • Liquiefied Natural Gas terminals will need to keep 20 percent of their capacity for public access, according to draft regulation.
  • Big customers on gas side will be able to carry out their own import through this.
  • Expect many industrial customers to have access to terminals.

Watch the entire conversation here: