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India's GAIL eyes compressed biogas in strategic push beyond natural gas

Highlights

GAIL looking for term CBG offtake agreement with partner

New Delhi aiming to make CBG a priority lending sector

Singapore — GAIL (India) Ltd. is looking to explore opportunities in the compressed biogas sector, as it steps up efforts to expand the business beyond natural gas, part of a push to embrace cleaner forms of energy.

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The move by GAIL, which commands a 75% market share in gas transmission and more than 50% share in gas trading in India, is seen as part of the government's vision to prepare for the energy transition process, under which New Delhi hopes to raise the share of gas in its energy mix from as low as 6% to 15% by 2030.

The state-run company recently signed an agreement with Carbon Clean Solutions Ltd. to build a strategic partnership and explore project development opportunities in the CBG value chain in India.

GAIL and CCSL will explore opportunities in areas, such as feedstock arrangement, production technologies, gas offtake arrangements, as well as transportation, marketing and distribution of CBG.

Through the memorandum of understanding, CCSL will initially build four CBG plants using their own funding, technology, and expertise. These plants will be based on 10-year CBG offtake agreements with GAIL or its associated companies.

"There is significant market potential for production of CBG in India," Santanu Roy, executive director for business development at GAIL, said in a recent statement. He added that this would help push the Sustainable Alternative Towards Affordable Transportation scheme of the petroleum ministry, which envisages targeting production of 15 million mt of CBG from 5,000 plants by 2023.

Upon completion of the initial plants, GAIL and CCSL will look to actively advance the partnership with the intention of developing up to 100 CBG plants in India, he added.

"As energy demand increases and the country looks to reduce its crude imports it provides a great business opportunity," said Aniruddha Sharma, CEO of CCSL, in a statement.

India, which imports 80% of its crude oil requirements, is stepping up efforts to explore new forms of energy to clean up the skies and reduce dependence on imported fuels.

The country's push toward embracing hydrogen is also gaining speed as some of the country's top energy companies, such as Indian Oil Corp., Reliance Industries and Adani Group, are increasingly highlighting the urgency to move toward the carbon-free fuel.

GAIL is India's leading natural gas company with interests across the natural trading, transmission, LPG production and transmission, LNG re-gasification, petrochemicals, city gas and E&P.

It owns and operates a network of around 12,200 km of high pressure trunk pipelines. In addition, it is working on multiple pipeline projects, aggregating over 5400 km.

The government is in the process of including CBG under priority sector lending in an effort to ease the process of financing CBG plants, according to the petroleum ministry.