India heading for surplus gas supply in 2yrs

From a gas-starved country forced to resort to spot purchases, India is set to emerge as a gas-surplus territory in the next two years, according to R C Sharma, president (LNG) of Reliance Industries (RIL).

RIL itself will be a significant contributor to this turnaround when it starts production from the gas-rich Krishna-Godavari (KG) basin by mid- 2008.

Estimates of production from its block KG-D6 have been doubled to 80 million metric standard cubic metres per day (mmscmd) earlier this month. This is almost equal to the 84 mmscmd produced in the country today. The blocks in the region have got further "upside potential. The deeper we are going, we find more and more potential," Sharma said at a conference on gas in Delhi.

Other operators in the KG basin area, like Gujarat State Petroleum Corporation (GSPC), are also expected to start production by early Jan 2009.

There will thus be a sharp spike in domestic gas production to 188 mmscmd in 2009-10, according to the Directorate General of Hydrocarbons. Supply will also be augmented by coal bed methane (CBM), with first gas expected by end-2007.

However, demand for gas is unlikely to see sharp spikes since gas-guzzling projects like power plants, which typically account for the largest chunk of gas consumption (about 40%) are being avoided in the 11th Plan period.

An aggressive GSPC, however, had a contrarian view. "Demand for gas is also driven by supply. Whatever supply is coming is being consumed. We believe demand for energy is a bottomless pit, and so is the case for gas," said Ravindra Agrawal, commercial head at GSPL, a subsidiary of GSPC.

Projecting a gas requirement of 194 mmscmd over the next five years, and a possible supply of 130-150 mmscmd, he said that the demand-supply gap would widen.