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New Delhi: The BJP-led government has released a draft LNG policy, under which it has proposed a slew of reforms to increase the adoption of LNG as transport fuel and in the mining sector in order to build a gas-based economy. According to a notification released by the Ministry of Petroleum and Natural Gas, the policy is aimed at increasing the share of natural gas in the Indian economy from the current 6.3 percent to 15 percent by 2030. In order to facilitate that, the policy proposes setting up of LNG terminals of 100 MMTPA capacity by 2030, regasification capacity of 100 MMTPA by 2040, allowing free marketing and sale of LNG, and allowing any entity to set up their own LNG storage and distribution facility.
The policy has been divided into three parts — upstream, midstream and downstream. The objective of the policy is to frame an integrated approach towards procurement, storage, transportation and use of LNG and ensure equitable distribution and adequate availability of LNG for all technologically feasible sectors.
LNG terminals with capacity more than 100 MMTPA is envisaged to be created along the coastal regions "to achieve the vision of taking natural gas share in primary energy mix to 15 percent by the year 2030," said the draft. For this purpose, the policy has proposed the creation of free and competitive re-gasification market, including on-shore and off-shore facilities. "The policy aims to create a regasification capacity of 70 MMTPA by 2030 and 100 MMTPA by the year 2040. The policy also aims at developing common carrier capacities in LNG terminals," said the document.
For transportation of LNG to areas of consumption, the policy has proposed virtual LNG pipelines in the form of rail and LNG truck loading. Under the plan, the government has also proposed promoting the manufacturing of LNG ships, FSRUs and other critical infrastructure for a gas-based economy in coordination with public and private sector players.
In the midstream category, the draft LNG policy has proposed dedicated highways with LNG infrastructure, developing high-volume closed loop truck circuits in areas that see mining activities and house refineries, mobile dispensing of LNG, creating enabling regulatory environment to ensure safe storage, transportation and usage of LNG and ancillary equipment, among others. One of the major changes proposed in the draft policy is the conversion of all long-haul heavy duty trucks and other similar automotive to LNG. The government has also spelled out a target of converting 10 percent of such vehicles to LNG.
The policy has also placed a lot of emphasis on promoting sale and marketing of LNG at gas exchange to develop spot and other possible markets.
Another major change proposed in the downstream industry is the free marketing and sale of LNG. "Marketing and sale of LNG as a vehicular fuel shall be a free activity and not have any restriction as to the quantity, area or any other parameter except the safety and technical parameters," said the draft document. Further, the policy has also made a case for allowing any entity, including City Gas Distribution (CGD) entity to set up their own LNG storage and distribution facility.
The policy has placed focus on the government's plan to set up 1,000 LNG stations and incentivising the development of new LNG compatible models or retrofitting of these vehicles through tax/cess exemptions, permits, green certificates etc.
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