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Dealing with the Natural Gas Shortage - International Law Office

International Law Office

Projects & Procurement - India

Dealing with the Natural Gas Shortage

November 12 1999

Natural gas constitutes about 7% of India's total energy consumption, but consumption is expected to double by the year 2000. As domestic production of natural gas will most likely increase only modestly, most of the increase in demand will be met through imports.

India is investing in infrastructure needed for importing natural gas. It is expanding domestic pipeline capacity. For example, the Gas Authority of India Ltd (GAIL) is expanding its pipeline between Hazira and Delhi. The added pipeline capacity will serve new power, petrochemical and fertilizer plants in Gujarat, Madhya Pradesh and Uttar Provinces. The country is also building new facilities to process and store imported liquid nitrogen gas (LNG).

Petronet has short-listed seven companies to bid on supplying LNG. These include Shell, Petronas, TOTAL, Pertamina, Chevron, Ras Laffan-Mobil and Woodside Petroleum. Other companies have made bids to construct LNG import facilities including Enron, Reliance Industries, British Gas, Shell, and other.

Oil and Natural Gas Corporation (ONGC) and Oil India Ltd. (OIL) are the main producers of gas in India. OIL is operating in Assam and Rajastan. ONGC is operating the western offshore fields, as well as developing five medium-sized fields through joint ventures with private parties. ONGC and OIL have entered into a number of other joint ventures with private companies to develop an additional 13 small fields.

As mentioned, even with the increase in domestic production of natural gas, demand is expected to far exceed supply. To meet this gap, the government has taken steps to increase imports of natural gas from the Middle East. Memoranda of understanding were signed with Iran in July and November of 1993 and a feasibility study for an Iran-India pipeline is in progress. The importation of gas from Bangladesh and Myanmar is also being explored.

For further information on this topic please contact Shardul Thacker at Mulla & Mulla & Craigie Blunt & Caroe by telephone (+91 22 204 4960) or by fax (+91 22 285 0315) or by e-mail (mmsjt@bom2.vsnl.net.in).

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