What does the Russian invasion of Ukraine mean for India’s energy security? Is India in a comfortable position? Can India turn this situation to its advantage or has India, yet again, missed the bus, on ensuring fuel secure supply, particularly gas.
Gas demand in India till the third quarter end of 2021-22 was approximately 180 mmscmd (million standard cubic metre a day) wherein 89 mmscmd was R-LNG (re-gasified liquefied natural gas or imported gas) and 91 mmscmd is domestic supplies. In the case of gas, demand is directly linked to supply.
According to the Ministry for Petroleum and Natural Gas data, natural gas production during January 2022 was 2,861.09 mmscm, which is 16.47 per cent lower than the monthly target. Cumulative natural gas production during April-January 2021-22 was 28,535 mmscm, which is 9.59 per cent lower when compared with target for the period.
Now look at the price — spot price of LNG is around $25 per mmBtu (gas is measured in million British thermal unit), long-term contract price ranges between $12 and $14 per mmBtu, and currently domestic gas is available at $3 mmBtu plus. India imports most of its gas requirements through long-term contracts.
How could have India shielded itself from the spike in prices and supply disruptions, if sanctions are imposed, as it happened with Iran, once a key supplier to India?
Just like India has been a late mover in setting of strategic storage for crude oil it has dragged its feet on transnational pipeline networks for ferrying gas. The Ministry had recently informed the Lok Sabha that the government had set a target to raise the share of natural gas in energy mix to 15 per cent by 2030. The share of natural gas in primary energy mix has increased from 6.3 per cent to 6.7 per cent from 2020 to 2021.
Critics say India by now should have had transnational gas pipeline network flowing gas into its territory. India did make an attempt, but those plans have not yet fructified. While the ambitious Iran-Pakistan-India gas pipeline has got lost in transit, another major project, which supposedly had the blessings of the US, Turkmenistan-Afghanistan-Pakistan-India (TAPI) natural gas project for import of gas to India from Turkmenistan through TAPI pipeline, also seems to be hanging fire.
GAIL is the Government of India's nominee in the TAPI natural gas project for import of gas. TAPI Pipeline Company Limited (TPCL) has been incorporated in Isle of Man to build, own, and operate the TAPI Pipeline. The pipeline, when constructed, is expected to carry 90 mmscmd of natural gas, of which India will receive 38 mmscmd. The project is currently under the pre-FID (feasibility study) stage, wherein various activities are being undertaken by TPCL.
Considering the changes in the global energy market, GAIL is discussing the terms and conditions with Turkmengas for enhancing the marketability of the pipeline gas to be received from Turkmenistan.
Ukraine is the transit point for Russian Gas to Europe and is not connected with India’s supply chain. But, there are more than 12 pipeline networks which transport Russian gas to European market starting from Estonia, Lativia, Lithuania, Belarus, Poland then to Bulgaria, Romania and Ukraine to name a few.
Russia supplies gas through pipeline network in European market through a subsea network en route the Baltic Sea up to Germany, which caters to France and Italy too and it is supplied through Nord Stream 1 pipeline. The Nordstream 2 pipeline is about to start.
Russia is not the only supplier, but ferrying gas through pipeline is a more secure and cost-effective option. Shipping is more expensive with added costs including the insurance cost, which is huge. Therefore, it is time for India to change its game plan and look at transnational networks more seriously.