India's transition to a gas economy: May not ever happen – 20 Jan 2022

India's domestic gas production profiles say a lot about how the gas pricing regime has stymied the entire system.

In nomination blocks that are under the aegis, particularly of ONGC, where prices are pegged very low, production has been declining, with output well below that of last year

On the other hand, private sector or joint venture output, where pricing is capped but at a much higher level than that of nomination blocks, the output growth is twice that of last year

Ideally, if prices are allowed to be discovered through the market mechanism, as is now allowed through IGX (allowed for up to 10% of the gas output), then prices elicited for domestic output would be way higher, and this in turn would have an impact on gas production

But the pricing regime is constrained by so many other considerations that India will never be able to get to the free pricing regime anytime soon

Our dependency on imported gas will continue to rise, and since LNG is likely to stay expensive in the foreseeable future, India's often repeated transition to a gas economy is unlikely to happen