India is making significant strides towards enhancing its energy security with GAIL (Gas Authority of India Limited) spearheading the initiative to build the country’s first strategic natural gas reserves. This ambitious project involves utilizing old, depleted hydrocarbon wells for storing natural gas, which will serve as a crucial hedge against global supply disruptions and price fluctuations. This initiative is particularly relevant given the geopolitical risks in key energy supplying regions like the Middle East and Africa.
The strategic gas reserves are planned to be developed in phases across India’s western and northeastern regions, with an initial capacity to store between three to four billion cubic meters (bcm) of gas. This move is in line with India’s broader energy strategy, which aims to increase the share of natural gas in its energy mix to 15% by 2030, up from the current 6.2%. The nation’s annual gas consumption stands at around 60 bcm.
Moreover, this initiative aligns with India’s goal to build a cleaner, gas-based economy. The strategic reserve will not only help manage demand spikes and price rises during crises but also support the country in coping with scenarios like border skirmishes and potential conflicts. The project’s importance is underscored by the fact that India currently meets nearly half of its natural gas consumption through imports, a figure that is expected to rise with increased consumption.
To facilitate this project, Oil Minister Hardeep Singh Puri has directed key players like Oil and National Gas Corporation, Oil India Limited, and GAIL to prepare a detailed feasibility report. The targeted gas storage facility, estimated to cost between 1-2 billion dollars, is aimed to be a mix of strategic and commercial storage. Potential locations for these reserves include depleted wells from the Oil and Natural Gas Corporation (ONGC) and Oil India, with ONGC identifying two wells in Gujarat and Oil India focusing on initiatives in the North-East Region.
This strategic gas reserve is expected to bolster India’s position as a leading regional hub for energy, potentially enabling the country to supply neighboring nations such as Sri Lanka, Bangladesh, and Myanmar in the future. The feasibility report, due in three months, will outline cost estimates, potential locations, construction timelines, and business and financial models for the gas reserves. It is anticipated that the first strategic gas storage facility could take three to four years to build following government approval.