Why India’s gas boom is running out of steam

Seen from a distance, India’s gas sector seems to have everything going for it. Given how energy-starved India is – not to mention climate commitments to reduce its economy’s carbon intensity – there is abundant demand. Given the global surge in gas production even as traditional markets slow, supply is not a problem either. Helping matters further, the Indian government has ambitious targets for gas.

And yet, the mood in the sector is pessimistic. Companies across its value chain of domestic gas production, terminals for processing imported gas, the pipelines moving it, big customers like power plants and city gas distributors (CGDs) supplying gas to smaller consumers, are either making losses or exploring ways to avoid slipping into losses.

Between June and August, CarbonCopy tried to understand what ails the sector. This is an important question. If gas fails to account for 15% of India’s energy mix, India might fall back on coal. The infrastructure being created right now might turn into NPAs. The country, with its slowing economy, might find itself locked into expensive gas purchase contracts.

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