Gas use in cities and transport promoted in India, Nigeria, and elsewhere

• DOI: http://doi.org/10.1111/oet.12833
• Published date: 01 January 2021
• Date: 01 January 2021

GAS AND POWER

Gas use in cities and transport promoted in India, Nigeria,

and elsewhere

A number of fast-developing economies are keen to

expand the share of gas in their energy mixes, spurred on

by recent low international prices, urban pollution, and

carbon goals. As well as power generation, the growth is

being driven by the expansion of city gas and gas-fuelled

transportation, as developing nations seek to clean up

their polluted cities.

India is perhaps the most significant developing econ-

omy currently attempting to raise the proportion of gas

in its energy mix, with much of this likely to come from

imports following disappointing domestic exploration

over recent years—currently, India relies on liquefied

natural gas (LNG) imports for about half its gas supply.

The country is keen to reduce its heavy dependence on

coal and oil for energy generation, industrial uses, and

transportation, which has led to terrible pollution in the

country's fast-growing cities—gas does not emit the NOx,

SOx, particulates, and other impurities that coal and oil

produce. India is also a major oil importer, but has large

reserves of coal, which had led governments to favor coal

developments until recently in order to enhance energy

security and minimize imports.

However, more recently, low international gas prices

and the rising city pollution levels, as well as a growing

acknowledgement of the need to reduce CO

2

emissions,

have led policymakers to switch to cleaner gas (and

renewables), with the Narendra Modi-led government

targeting an increase in the share of gas in its energy mix

from 6 to 7% today to 15% by the end of 2020s. To achieve

this, the government has eased marketing and pricing

rules, and is conducting regular city gas distribution

(CGD) licensing rounds, as well as encouraging major

suppliers to extend the transmission network. The new

rules and target could also revive more than 10 GW of

idle gas-based power plants in India—total Indian gas-

fired capacity stands at about 25 GW, but the shortage of

affordable domestic gas means it is underutilized.

The strong policy support for gas has attracted several

foreign investors to the sector over the last year or two.

Early in 2020, New York-listed Chart Industries,

ExxonMobil and state-run Indian Oil Corp, teamed up to

bring gas to more users. And in March, Shell signed a

deal with Indian cryogenic liquid storage, distribution,

and regasification solutions provider, Inox India, to

develop a market for LNG supplied by road from its 5 mn

t/yr Hazira import terminal. There have also been moves

directly into city gas. Last year, Total tied up with Adani

Gas, one of India's biggest CGD companies, while

Singapore's AG&P has gone a step further and acquired

CGD licenses, as well as building an LNG import

terminal.

Another Singapore-based firm, LNG Alliance, is plan-

ning two or three LNG satellite stations, which will act as

a mini-LNG storage and regasification facilities to supply

industrial clusters around major cities. It will also invest

in LNG fuelling stations for trucks and heavy vehicles.

LNG Alliance plans to export LNG to India from its pro-

posed Amigo LNG liquefaction project in Mexico, which

will be supplied at Henry Hub-related prices that should

ensure it remains price competitive against coal and other

gas sources.

1|AFRICAN FUTURE

Another fast-developing giant, Nigeria, is also seeking to

encourage gas use; but unlike India, it has extensive

domestic gas reserves and flared production, which it

hopes to utilize. In transportation, the country plans to

use gas to help cut the extensive use of highly polluting,

high sulfur gasoline,

1

most of which is imported (although

Nigeria is a major oil producer, domestic production of

refined products falls well below demand). The govern-

ment launched its National Gas Expansion Programme

(NGEP) on December 1st, focusing on the distribution of

compressed natural gas (CNG) for transportation. “The

[Muhammadu] Buhari administration is focusedon devel-

oping the country's natural gas resources, as part of the

government bid to key into the global shift from crude oil

to gas,”the country's oil minister, Timipre Sylva, said in

December. “The plan to develop CNG into an alternative

automobile fuel will also afford Nigerians cheaper, cleaner

and additional fuel.”

Deregulation of retail prices has pushed up gasoline

costs, which has also helped make gas more competitive,

and the government hopes to get up to one million vehi-

cles converted from gasoline to CNG by the end of 2021.

However, S&P Global Platts expects the program to

DOI: 10.1111/oet.12833