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Almost 70 per cent of India’s Natural Gas reserves are found in the Bombay High basin and in Gujarat. Offshore gas reserves are also located in Andhra Pradesh coast (Krishna Godavari Basin) and Tamil Nadu coast (Cauvery Basin). Onshore reserves are located in Gujarat and the North Eastern states (Assam and Tripura).

Small amounts of reserves have also been found in Rajasthan. Although the state owned enterprises increased the reserve base significantly over the period 1975- 90, the gap between domestic production and demand widened significantly in the 90s.

As a result, initiatives were taken to encourage private sector investment in the E&P sector, with exploration acreage offered to private companies under production sharing arrangements with the Indian government. Accordingly, in June 1994 the government awarded the first Joint Venture (JV) fields to be operated by joint ventures of state enterprises with private companies.

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Until April 1998, E&P activities in the country were steered mainly by the PSUs – ONGC and OIL. However, with less than 25 per cent of the country’s sedimentary areas covered under exploratory surveys, along with the stagnating domestic hydrocarbon production and declining reserve replacement ratios, the Government of India felt the urgency to harness its potentially substantial hydrocarbon reserves.

Therefore in 1999, the Government of India introduced the New Exploration Licensing Policy (NELP) to provide attractive incentives and level playing field to new entrants, including foreign companies in the E&P sector. After the opening up of the E&P sector apart from ONGC and OIL, many players including big domestic and international companies entered the arena.

Bidding results in all the four rounds of NELP so far show that while ONGC is set to dominate, Reliance is emerging as an important player. Reserves The total resource base of oil and gas is the entire volume formed and trapped in-place within the Earth before any production. The largest portion of this base is non-recoverable by current or foreseeable technology. This inability is either because of un favourable economics, or intractable physical forces, or a combination of both.

At the next level, the recoverable resources are divided into discovered and undiscovered segments. In India reserves are classified as (a) Prognosticated (which is basically all the resources "expected" to be contained), (b) geological or in-place which is discovered resources but not recoverable and (c) balance recoverable reserves. The total proven reserves on natural gas in India as at the end of FY2002 was about 750 billion cubic metres. The giant gas discovery in the KG baisn resulted in the reserves at the end of FY2003 increase to 920 billion cubic metres (mcm).

The total gas production in India was about 31,400 mcm in 2002-03 compared with 2,358 mcm in 1980-81. At this production level, India's reserves are likely to last for around 29 years; that is significantly longer than the 19 years estimated for oil reserves.

The current production of Natural Gas in the country is around 86 MMSCMD. After taking into account the internal consumption, flaring, shrinkage on account of extraction of LPG and C 2 and C 3 fractions, etc. the net availability of gas for supply to the consumers is to the extent of around 68 MMSCMD. As against this, the total firm commitments made in terms of gas allocations to various consumers is to the extent of about 120 MMSCMD.

This figure indicates the allocation made and does not take into account the large unmet demand of gas. As per the study conducted by an Expert Group constituted by Ministry of Petroleum and Natural Gas a few years earlier, the demand for gas was assessed at 188 MMSCMD in 2004-05 and 283 MMSCMD in 2009-10. The Government under the technical assistance of Asian Development Bank also commissioned a study. This study conducted by M/s Bechtel Ltd., UK also indicated that the demand could vary between 203 MMSCMD (high case) to 140 MMSCMD (low case) in 2012.

In another estimate the same study indicated that the demand supply gap would increase to 226 MMSCMD by 2020. Similarly, the India Hydrocarbon Vision –2025 also estimated the demand at 117 MMSCMD by 2002, which would gradually increase to 322 MMSCMD by 2025 in one scenario and to 391 MMSCMD as per another scenario.

Therefore, the demand-supply gap ranges from 47 MMSCMD in 2002 to nearly 355 MMSCMD in 2025. Currently, only 68 MMSCMD of gas is available to the consumers. The gas recently tapped by Reliance in Krishna-Godavari Basin, in Andhra Pradesh, will be available to the consumer in another two to three years.

However, even if the entire 40 MMSCMD4 from Reliance’s gas find is added to the current availability of gas, the total GAIL - Infraline Natural Gas in India: A Reference Book Various Gas Demand Estimates for 2006-07 gas that could be supplied to the consumer comes to 108 MMSCMD, leaving still a gap with unmet demand.

The current scenario is likely to change, as the supply position will improve considerably by 2006-07 as a result of development of new discoveries. There are a number of estimates of demand made at different points of time by different agencies whose objectives were also different.

Therefore, there are variations in the results of these studies. While some of the studies have taken price elasticity of demand in consideration but most of them have not. The chapter on Demand-Supply presents five such cases. First case presents the potential gas demand estimates of GLC based on the existing allocations and growing applications for further allocation of more gas.

The second case gives the estimates as per the Hydrocarbon Vision 2025 and the third case is the summation of gas master plan developed by Asian Development Bank in 1999. Fourth case highlights the GDP Indexed demand growth as estimated in a study conducted by TERI, which is based on the calculation of imputed value of gas and covers the price sensitivity.

Finally, the fifth case throws some light on the region-wise estimates after including the likely supply from recent gas finds, such as, those of Reliance.

With inputs from Multi Commodity Exchange of India Ltd

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