By R. Sasankan

Noble intentions are often smothered by harsh ground realities. Nowhere is this better proven than in India's natural gas sector where domestic production is way short of consumption. But soaring ambition can often turn into a Fool's Game.

Back in 2016, the Government of India set for itself an ambitious target by seeking to raise the share of natural gas in the energy mix to 15 per cent by 2030. At that time, the share of gas was wallowing  around 6.43 per cent.

One would have thought that the yawning gap between domestic production and natural gas consumption would be just the kind of situation that this ambitious target to raise natural gas' share in the energy mix would seek to address.

"India's natural gas production for the first half of the fiscal year 2024-25 stood at 18,160 million metric standard cubic metres (MMSCM), while consumption, including internal usage, soared to 36,850 MMSCM. The figures covering the period from April to September 2024, underscore the widening gap between domestic production and consumption, reflecting the nation's increasing reliance on imports to meet its growing energy demands," says PPAC, a wing of the Ministry of Petroleum and Natural Gas.

However, this is where a dilemma begins: since the goal was articulated, the needle has not moved by much. The share of natural gas is not rising as fast as planned. So far, it has risen to just 6.7 per cent (read column Regulation for details). At the current pace of growth, it may not be possible to achieve the 15 per cent target even by 2050.

This is only one aspect of the gas dilemma. There is no precise estimate of the country's real demand for natural gas. True, India has been meeting half the market demand through imported LNG. The country's actual demand is far greater than what the imported LNG meets. Why then is the country shying away from LNG when there is no shortage in the market? The Indian reality is that a vast section of potential gas users simply cannot afford LNG. Some of them cannot even afford domestically-produced natural gas. This is precisely why quite a few gas-based power plants in the power-starved country remain idle even as the state electricity boards cannot pay the high price of gas-based power.

This is one area where the Modi government has not paid much attention. The petroleum ministry has a transparent leadership but the problem calls for intervention at the Prime Minister's level. Mr Modi must take up the matter with his counterparts in gas-producing countries.

I have discussed this subject before in this column but thought of reviving a discussion on this vital subject because the deepening of the so-called gas dilemma suggests that the government is helpless to deal with a bad situation.

Neighbouring Pakistan recently discovered a gas field which is believed to be fairly large. The possibility of finding a massive gas reserve in India cannot be ruled out. But the fact remains that neither ONGC nor Oil India - the two principal state-owned upstream oil giants - have not been able to find a commercially exploitable gas field since the discovery of the Bassein field in 1976. As a result, India has been forced to import LNG from the Middle East which is geographically close. The country also has a long- term supply contract with Qatar for 8.5 million tonnes per annum of LNG.

The price difference between a long-term and a short-term gas supply contract is only marginal and will not solve India's problem. For the majority of the Indian consumers, the price has to be significantly lower. It is this factor that is weighing heavily on the plan to crank up the share of natural gas in the energy mix to the desired level of 15 per cent.

The price can be nudged downward only if the Indian public sector companies become owners of the LNG at source. There is a compelling need to ensure that these companies start acquiring gas assets overseas. It will not be possible to acquire gas assets in the Middle East or in a neighbouring country. But the US is the ideal market for this. India's state-owned Gas Authority of India Ltd (GAIL) had already taken an initiative in this direction though the final outcome is not clear. But we must also realise that one field will not solve India's problem unless it is fairly large. There are several cash-rich companies in India's petroleum sector and it would wise to form a consortium, possibly under the leadership of GAIL, to acquire such fields overseas.

The second potential source is Russia. Since February 2023 when the Ukraine crisis broke out, Russia has surprisingly emerged as a major source of crude oil at heavy price discounts. Russia is rich in gas as well. Even after the West slapped economic sanctions against President Putin's regime, Russia continues to be a major source of LNG for EU nations. According to reliable data, in June 2024, EU was the largest importer of Russian LNG, purchasing 54% of Russia's total exports, followed by China (22%) and Japan (18%). Belgium, Spain, and France exclusively imported LNG from Russia in June. Belgium was the second-largest overall importer of Russian fossil fuels, buying EUR 223 million, followed by Spain with EUR 182 million and France with EUR 151 million.

Why can't the lndian PSUs strike a deal with Russia for LNG? The global oil giants like Exxon have abandoned Russian projects after the Ukraine crisis - and India can and should exploit Mr Modi's close contacts with President Putin to help Indian oil companies acquire stakes in some of the Russian LNG projects that the oil majors have walked out from. It may not be easy to acquire oil and gas fields outright in Russia. But India could hope to buy the stake that the global oil giants have given up in their Russian LNG projects. This will be possible only if Mr Modi takes it up with President Putin.

The US administration should not object to such a development as India depends heavily on imports to meet its energy requirement. After all, China, which is the US' biggest rival, was the largest buyer of Russian fossil fuels in June, accounting for 43% of Russia's monthly export earnings.