ONGC is eyeing to ramp up its domestic gas production to mitigate the impact of market volatility on India and enable the nation to move towards a gas-based economy, ONGC CMD Subhash Kumar said at the 5th India Energy Forum by CERAWeek on 22 October 2021. Speaking at the global convention, being organized in a hybrid mode during 20 - 22 October 2021, the CMD highlighted that India has brought remarkable reforms in the Energy Sector and asserted that he sees a bright future for natural gas in the developing economy. The topic of the panel discussion was “How will gas fare in the in the Energy Transition: Beneficiary or Casualty?”
ONGC CMD Subhash Kumar (right) and Petronet LNG MD & CEO Akshay Kumar Singh at India Energy Forum
Speaking about the high prices of oil, CMD said that one of the main reasons for high prices of oil is that everyone underestimated the capacity of the people to fight the pandemic. “The outlook for global growth is much better. In India, the demand has outpaced that of 2019. This should have been a good news, but it has brought with it some supply constraints.” Mr Kumar went on to discuss several other factors that have contributed to rising prices of oil and gas.
He said that another issue leading to the high prices, which he believed is less talked about, is ESE (Environmental, Social and Ethical) concerns. The CMD also noted that there is a sentiment of withdrawal of investments from oil and gas due to the narrative, more than anything else. However, Mr Kumar said that India has moved to a regime where, “We believe that a lot of investments will be made in the country. In the context of ONGC, we are in the midst of building one of our biggest projects in High Pressure and High Temperature (HP-HT) geology. We are looking for partnerships for its development, as building it with experienced partners will be much easier than going alone,” he said.
The CMD noted that India happens to have one of the highest density of population along with being the second most populous country in the world. “That is a huge thing. India is a huge market,” he said. Talking about ways to support the growing energy needs of the country, Mr Kumar said that India is looking to develop pipelines and infrastructure to support transition to becoming a gas-based economy. The CMD highlighted that ONGC will be one of the most compliant companies in terms of carbon emission, enabling sustainable development.
ONGC CMD speaking at India Energy Forum
“As far as infrastructure is concerned, businesses expand in multiples with appropriate infrastructure.” In addition to this, the CMD said that there is a massive jump City Gas Distribution (CGD) coverage. In a country which is densely populated and has a huge population, this is a huge deal, he noted.
Noting that gas is one of the cleanest sources of energy, the CMD said that he sees a very bright future for natural gas in India. Taking note of India’s vision to become a gas-based economy by increasing the share of gas in the energy mix from 6 per cent to 15 per cent in 2030, he noted that other energy sources like bio gas and LNG will also witness a huge push in the coming years. He also noted that India is in an advantageous position to enable this transmission.
The discussion was moderated by Chief Strategist, Global Gas, Energy; CERAWeek Vice Chair, IHS Markit Michael Stoppard.
Petronet LNG Ltd MD and CEO Akshay Kumar Singh, speaking during the discussion, said that the last six to seven months have witnessed the lowest and highest LNG prices. Such volatility is an area of concern and causing demand destruction, he said. Mr Singh noted that economic recovery around the globe has been better than expected, which he said is a factor pushing the demand. He said that this situation is forcing everyone to look towards long-term contracts. “Earlier, people were thinking spot was better than long-term contracts, which was bringing uncertainty in upstream sector. That may soon change.”
Talking about progress and challenges, he said that currently, we are consuming 42 million tons of natural gas; this quantity has to increase to 160 million tons if we want to meet the target of 15 per cent gas in energy mix by 2030. Mr Singh noted that LNG is going to play a key role in India’s move towards becoming a gas-based economy. He said that natural gas is going to stay for three to four decades in India. “It will enable transition to green energy. Natural gas complements the clean energy transition. It will help in India meet its energy demand and replace carbon intensive energy sources.”
Clockwise from top left) CERAWeek Vice Chair of IHS Markit Michael Stoppard, Petronet LNG Ltd MD
and CEO Akshay Kumar Singh, ONGC CMD Subhash Kumar and Freeport LNG Chairman and CEO Michael Smith
Freeport LNG Chairman and CEO Michael Smith, on the other hand, noted that people underestimated the demand, especially from China, which is set to surpass Japan as the largest buyer and thereby reducing gas availability. He said that there is a tight market and added that this will switch the mentality of buying spots and turn businesses to look for long term contracts.
He said that India is a very big market, is fast growing and is expected to eventually become one of the largest markets. Mr Smith said that anywhere LNG and Natural Gas can supplement coal or carbon intensive fuels is energy transition. “Renewable are incredible and are growing at incredible pace, growing from nothing to meeting all kinds of energy needs today, he said.