ONGC Secures Nation's Future: Strategic Gas Reserve Planned as Global Energy Tensions Rise

ONGC Secures Nation's Future: Strategic Gas Reserve Planned as Global Energy Tensions Rise​

State-run Oil and Natural Gas Corporation (ONGC) is set to spearhead India’s first strategic natural gas reserve. The move comes after intense consideration of global energy security amidst rising geopolitical tensions in West Asia, which have significantly disrupted worldwide supply chains. This initiative aims to bolster the country's long-term resource stability against external shocks.

Addressing Energy Security Gaps​

The focus on creating a dedicated gas reserve is crucial given India’s dependence on imports. The nation currently sources about 55 percent of its natural gas requirements, representing annual imports valued at nearly $15 billion. This strategic initiative follows ONGC's recent announcement to construct a substantial 1.75-million-tonne strategic crude oil storage facility, complementing India's existing petroleum reserves of 5.2 million tonnes.

Implementation Strategy and Storage Methods​

Initially, the plan involves developing a pilot project through feasibility surveys near producing assets in western India. The preferred method for underground storage is utilizing depleted gas wells. These fields are emerging as an ideal solution because they possess the necessary geology and infrastructure to handle natural gas pressure, while requiring lower capital expenditure compared to prior proposals.

While specialized caverns were considered earlier, those plans did not progress due to high technical and capital costs. Consequently, alongside depleted fields, aquifers are now being rigorously evaluated as alternative storage options. The Petroleum and Natural Gas Regulatory Board (PNGRB) is also assessing the viability of overground gas storage tanks near major LNG terminals.

Commercial Viability and Future Demand Projections​

Industry experts suggest that any strategic reserve must incorporate a robust commercial component. Rajesh Mediratta, Managing Director and CEO of Indian Gas Exchange, outlined a functional revenue model similar to those in Europe. He suggested that if a 5 billion cubic metres (BCM) reserve is established, approximately 2 BCM could be used under a tradable commercial model, reserving the remainder strictly for emergency strategic use.

This emphasis on domestic security is underscored by PNGRB projections regarding future consumption. The regulator projects that India's gas demand could reach 297-365 million standard cubic metres per day (mmscmd) by 2030. Demand is expected to climb even higher, reaching 495-630 mmscmd by the year 2040.