Recommendations of the Shastri Bhawan gas report

Vol 6, PW 8 (19 Jun 02) Midstream & Downstream

INDIA NEEDS TO put in place a clear "gas sourcing" strategy.

This is one of the broad policy recommendations of the above study. Another crucial recommendation is on gas pricing.

"A gas pricing principle for the basic gas price should be established early to enable the development of markets as well as to support gas import projects." Other recommendations As India is an emerging gas market, studies are needed to reach an "optimal mix of imported gas in total gas supplies as well as the overall share of gas in the energy balance." It also calls for a strategy to measure the "medium and long term regional gas demand supply scenarios and to evolve an optimal mix of supply sources - domestic, LNG, pipeline gas." Panel estimates suggest India's gas sector will need between Rs20,000cr and Rs25,000cr ($4.17bn-$5.21bn) investments over the next five years, mainly to set up LNG terminals, gas processing facilities, and cross country gas pipeline systems. Also envisaged by the panel is a National Gas Grid.

How much of this investment will be from private investors "Like the gas demand build up, market credibility would also influence the availability of private capital for the growth of gas sector." Conscious that domestic gas supplies will have to be increasingly supplemented with imported pipeline gas or LNG, "it would be necessary to evolve certain guidelines for the utilisation of gas, which ensures maximisation of utilisation of (its) energy component." All the same, the panel wants a boost for domestic gas supplies "through accelerated development of new gas finds and exploitation of unconventional gas resources - coal bed methane, offshore gas hydrates."