The gas pipeline infrastructure provides an economical and safe mode of transporting natural gas. At present, natural gas pipelines are concentrated in regions where gas production and import terminals are located. In the past four to five years, there has been an addition of close to 7,500 km of operational natural gas pipeline length in India. As of September 2024, 33,475 km of natural gas pipeline length has been authorised, while 24,945 km is operational and more than 10,000 km is under construction.
Natural gas pipeline trends
Natural gas pipelines in India have evolved over the past two decades. Before 2007, the natural gas network was dominated by GAIL (India) Limited and Gujarat State Petronet Limited (GSPL). With the formation of the Petroleum and Natural Gas Regulatory Board (PNGRB) in 2006, new regulations and multiple tariff structures were introduced, highlighting regional imbalances in the pipeline network. During the 2007-20 period, the gas pipeline network increased from 7,200 km to about 17,000 km, and was owned by multiple entities with individual tariffs. The concentration of natural gas pipelines in a few pockets/regions resulted in regional imbalance during that time.
Between 2020 and 2023, numerous measures were adopted, such as making gas accessible to far-flung areas, discontinuing the additive tariff regime and introducing the “One Nation One Gas Grid” initiative. The initiative is the centre’s flagship gas infrastructure project which aims to connect 22 trunk and regional pipelines, promising a unified and efficient national network. With effect from April 2023, the PNGRB has implemented a unified tariff for the interconnected natural gas pipelines. The entity-level integrated natural gas pipeline tariff has been introduced in the regulations to simplify the implementation of a unified tariff. Further, to protect the overall interest of consumers in different regions, the number of unified tariff zones has been increased from two to three.
At present, capacity utilisation stands at 40-50 per cent for most of the major gas pipelines. For instance, GAIL’s integrated pipeline network has 48 per cent capacity utilisation and Indian Oil Corporation Limited’s (IOCL) Dadri-Panipat natural gas pipeline has 52 per cent capacity utilisation. However, the pipeline network of GSPL is an is an exception with 71 per cent capacity utilisation. Expanding the footprint of pipeline network infrastructure in India is crucial to make it accessible in remote locations and enhance capacity utilisation.
PIL pipeline network
Pipeline Infrastructure Limited (PIL) owns and operates a 1,480 km gas pipeline length from Kakinada in Andhra Pradesh to Bharuch in Gujarat, connecting major domestic supply hubs in the country’s east to key demand centres in the west. It is India’s first pipeline to facilitate bi-directional flow of natural gas, and is a vital link in the national gas grid. The pipeline network includes spur and dedicated pipelines, and is complemented by above-ground facilities, featuring 10 compressor stations (located at regular intervals of 150 km) with a combined installed power capacity surpassing 900 MW.
Currently, PIL’s capacity utilisation is about 40 per cent of design capacity. About 30 per cent of domestic gas in the country is transported through PIL. The volume transported by the pipeline has nearly doubled in the past five years, with increased availability of domestic gas on the east coast. The entire pipeline is being operated remotely with two stations, one in Mumbai and the second in Hyderabad.
PIL also serves varied segments, such as refineries, fertilisers, petrochemicals, power plants, and city gas distribution (CGD), playing an integral part in India’s national gas grid and the unified tariff regime.
Looming challenges and possible solutions
One of the key concerns for the natural gas sector is the regional disconnect between pipelines as well as between Southern India and the National Gas Grid. This poses a significant challenge for the expansion of the National Gas Grid. Further, there are bottlenecks with regard to the alignment of technical requirements between pipelines constituting the National Gas Grid, as each pipeline has its own pressure regime and pressure parameters.
The substantial amount of funding and capital investments required for pipeline construction remains a major issue. About 90 per cent of the pipelines which were executed and operationalised between 2007 and 2024 belong to the state sector. Besides, around 88 per cent of the pipelines which are under execution currently also belong to the state sector. This indicates a lack of private sector participation. There are only a few private players in the midstream segment, as volume risk continues to bog down transporters. Thus, there is a need to de-link the overall volume risk from pipeline operations. If proper due diligence is done at the beginning while authorising the pipeline and demand is assessed properly, these issues can be avoided.
Another pain point is obtaining the right of way and other approvals from local authorities on time to prevent time and cost overruns in pipeline construction. There should be a single window mechanism to smoothen the approval process.
All such issues need to be addressed while drafting the access code or operating code so that gas can flow seamlessly. Discussions are also being held to get all parameters of gas available at a central portal. This will require all pipeline operators to integrate their software. Along with this, critical support is needed from government authorities and stakeholders across the natural gas value chain.
There are operational challenges associated with the natural gas pipeline network. With continuous development, rural areas are being converted into semi-urban and urban areas, this often leads to encroachment because pipelines are a linear asset. For daily maintenance purposes, workers are required to travel long distances of about 200 km in remote areas to reach pipeline locations and compressor stations. This poses safety challenges.
To overcome these challenges, PIL is undertaking robust governance and operating practices, which will include a standard operating procedure, a standard maintenance procedure and a robust pipeline integrity system. Further, there is a need to deploy advanced technologies for the operation and maintenance of the pipeline network. Besides, upskilling the manpower remains essential. The company’s roadmap for the coming years includes driving operational excellence by enhancing asset reliability, and improving risk-based decision-making and reliance mechanisms.
Optimistic outlook
Going forward, India’s natural gas demand is expected to increase, driven by industries, as well as the CGD and road transportation segments. The government has announced that the country will witness a $67 billion investment in the natural gas supply chain in the next five to six years as part of unprecedented investments flowing into the
energy sector.
Initiatives are also under way to transition to renewable energy, accounting for a share of around 25 per cent of the total energy consumption by 2050, and achieving the net-zero target by 2070. Currently, coal constitutes 56 per cent of India’s primary energy. It is followed by oil at 27 per cent, natural gas at 6 per cent, renewables at 6 per cent, hydroelectric power at 4 per cent, and nuclear at 1 per cent. Apart from renewables, natural gas is the only fossil fuel that is expected to increase its share in the energy mix to 9 per cent by 2050 in India.
The need of the hour is to speed up the project execution process. Also, the issue with regard to the non-equitable distribution of cross-country pipeline networks and liquefied natural gas terminals on the west side needs to be addressed. There is a need to promote the participation of private operators and international investors in India’s gas infrastructure development. Conducive policies and regulatory measures including viability gap funding for cross-country pipeline, single-window clearance and accelerated asset monetisation are required to expedite the creation of natural gas infrastructure in the country.
Based on remarks and presentation by Manoj Pandey, Vice-President – Business Operations and Development, Pipeline Infrastructure Limited, at a recent India Infrastructure conference.
