India Seeks a Future in Gas

India, a big fuel importer, might seem a natural destination for liquefied natural gas (LNG) from Qatar, but until this year such imports have not materialized.

Late last month, Qatargas and Royal Dutch Shell announced they had loaded their first cargo of liquefied natural gas (LNG) from the Qatargas project. It was bound for India's west coast terminal of Hazira.

The development not only marked the culmination of Qatar's plans to become the world's biggest LNG exporter, with 77 million tons of annual production capacity, but also represented a vote of confidence in India's recent progress with its gas grid.

India is poised to transform its power sector away from coal and imported oil towards cleaner-burning natural gas with the help of newly discovered gas reserves and infrastructure.

"The mix will shift toward natural gas," says Manu Srivastava, the director of gas at India's energy ministry. "There's so much hunger for power and energy."

The country's lack of pipelines and import terminals, however, has prevented it from taking full advantage of the recent glut of gas on world markets. But things are changing.

Analysts and industry insiders say India needs to develop nationwide gas distribution capacity to back long-term supply agreements with major LNG suppliers such as Qatar. Until this year, however, there were few signs its government was serious about attracting investment for the five major pipeline projects needed to connect India's various regional gas pipeline systems.

But now firm ministry plans are in place to increase India's trunk pipeline capacity by 50% to 16,323km by the end of next year.

Beyond importing more gas, India is seeking to boost domestic gas production and add new reserves.