Strategic Gas Pile

CONTEXT: India is exploring building strategic natural gas storage facilities in the country on the lines of strategic crude oil reserves.

PURPOSE OF STRATEGIC GAS STOCKPILE

• Energy Security: Developing strategic gas reserves is crucial for India’s energy security as it ensures a reliable and uninterrupted supply of natural gas. In times of supply disruptions or geopolitical uncertainties, these reserves act as a buffer, ensuring stability in the country’s energy sector.
• Price Stability: Strategic gas reserves enable India to mitigate the impact of sudden spikes in global gas prices. By having reserves in place, the country can use them during periods of price volatility, reducing the reliance on expensive imports and stabilizing domestic gas prices.
• Economic Resilience: Having strategic reserves can protect India from sudden spikes in natural gas prices, which can have significant economic implications.
• Geopolitical Leverage: By having reserves, India can negotiate better terms with gas suppliers, as it can rely on its strategic stockpiles during times of supply constraints.

DEMAND OF NATURAL GAS IN INDIA

• India is a net importer of natural gas and depends on imports to meet around half of its requirements.
• The government considers natural gas as a key transition fuel and is pushing for increasing its consumption in the country.
• India has set a target to increase the share of natural gas in its primary energy mix to 15 per cent by 2030
• India was adversely impacted by the tightening global supply and surging gas prices last year in the aftermath of Russia’s invasion of Ukraine.

CHALLENGES

• Infrastructure Development: Establishing the required infrastructure for gas storage, including retrofitting depleted reservoirs or building LNG tanks, involves significant investment and technical challenges.
• Cost Considerations: The cost of setting up and maintaining strategic gas reserves needs to be balanced against potential benefits in terms of energy security and price hedging.
• Regulatory Framework: Clear regulations and policies need to be in place to govern the ownership, management, and utilization of strategic gas reserves.

WAY FORWARD

• Comprehensive Energy Security Policy: Develop a comprehensive energy security policy that outlines the importance of strategic gas stockpiles in ensuring the stability of energy supply, particularly in times of geopolitical uncertainties and disruptions.
• Selection of Gas Types: Identify the types of gases to be included in the stockpile. This could include natural gas, liquefied natural gas (LNG), and other relevant gases based on the energy mix and domestic requirements.
• Storage Infrastructure: Invest in adequate storage infrastructure for gas stockpiles. This includes establishing underground storage facilities, above-ground tanks, and other appropriate storage methods to ensure the safe storage of gas over extended periods.
• International Partnerships: Collaborate with other countries to establish joint gas stockpiles or share storage facilities. This not only enhances energy security but also fosters diplomatic and economic relationships.
• Regulatory Framework: Establish a regulatory framework that governs the operation, maintenance, and utilization of the strategic gas stockpile. This framework should address safety, environmental concerns, and compliance with international standards.
• Research and Innovation: Invest in research and innovation to explore alternative storage technologies, efficient gas extraction methods, and ways to reduce dependency on imports through the development of domestic gas resources.
• Global Market Insights: Stay well-informed about global gas market trends, geopolitical developments, and technological advancements to adapt the strategic gas stockpile strategy accordingly.

METHODS TO STORE GAS STOCKPILE

• Storing natural gas in abandoned gas wells.
• Natural gas can be stored underground in depleted reservoirs in oil and gas fields.
• Underground depleted reservoirs in natural aquifers and salt caverns.
• Developing underground storage in different types of subsurface formations.
• International practices
  • Storage capacities in five EU member countries–Germany, Italy, France, the Netherlands, and Austria—account for two-thirds of the EU’s total gas storage capacity.

STRATEGIC CRUDE OIL RESERVES IN INDIA

• Capacity: 5.33 million tonnes of oil in underground caverns. The capacity is being expanded by another 6.5 million tonnes in the second phase of the project.
• Fit to meet around 9.5 days of the country’s oil demand.
• Government of India through Indian Strategic Petroleum Reserve Ltd. (ISPRL) under Phase–1 has setup Strategic Petroleum Reserves (SPR) at three locations with a capacity of 5.33 MMT (million metric ton) –
  • Vishakhapatnam (1.33 MMT),
  • Mangaluru (1.50 MMT) and
  • Padur (2.5 MMT)
• Comparison with other Countries
  • The top three countries in terms of such reserves for crude oil are the US, China and Japan.
  • At an average daily global consumption of 95 million barrels a day, that’s roughly 20-odd days of oil.
• Government-owned engineering consultancy firm Engineers India (EIL) is studying the prospects and feasibility of developing salt cavern-based strategic oil reserves in Rajasthan.

PHASE-2 OF SPR PROGRAMME:

• Under Phase-2 of the programme, the government has given in-principle approval for the construction of additional SPR facilities at two locations (Chandikhol (4 MMT) and Padur (2.5 MMT)).
• In the second phase of the programme, the government wants to develop strategic reserves through public-private partnerships so as to reduce government spending and exploit the commercial potential of the reserves.

India has also decided to commercialize its SPRs. As part of this, Abu Dhabi National Oil Company (ADNOC) stored about 0.8 million tonnes of crude oil in the Mangaluru strategic reserve.