West Asia war pushes ONGC to plan India's first strategic gas reserve

“The plan is to initially come up with a pilot. The consideration right now is to do a feasibility survey and develop a reserve or storage in a depleted gas well, as that would be ready to handle the pressure of natural gas and the geology is already meant for it,” said one of the two persons cited above.

Apart from salt caverns, aquifers are another option for natural gas storage. A deep, water-bearing, porous rock formation can be converted into an artificial underground gas reservoir by injecting gas at high pressure to push the water out, trapping the gas safely beneath an impermeable cap rock.

Mint reported on 4 March that the Petroleum and Natural Gas Regulatory Board (PNGRB) is considering proposing to the government to set up overground storage tanks near the liquefied natural gas (LNG) terminals in the country.

However, when such strategic reserves are planned, a portion should also be reserved for commercial use, said Rajesh Mediratta, managing director and chief executive of Indian Gas Exchange.

"Suppose the reserve is for 5 BCM (billion cubic metres). About 2 BCM can be used under a commercial model that can be easily traded and refilled, and the rest should be kept for strategic use only in an emergency situation. This will develop a functional revenue model as witnessed in Europe," he said.

He added that the first preference for natural gas storage should always be depleted fields, given that the required infrastructure is already in place and capex is much lower than for salt caverns.

Mint's queries emailed to ONGC and the Union petroleum ministry remained unanswered.

Energy vulnerabilities

Although the country has diversified oil imports over the past few years, LNG imports cannot be diversified as aggressively, given the limited large sources available globally. Currently, the US and Angola are among the key suppliers, alongside Qatar and the United Arab Emirates, which have been impacted by the war.

Ships are avoiding the Strait of Hormuz, as Iran's Islamic Revolutionary Guard Corps (IRGC) has announced the closure of the route. According to data from S&P Global Commodities at Sea, there were a total of 16 transits through the Strait of Hormuz on 20 July, down from the pre-war levels of over 130 vessels.

“Nearly half of the detected traffic consisted of support and miscellaneous vessels, highlighting the limited level of commercial activity in the waterway,” said the S&P report on Wednesday.

Natural gas imports stood at $14.9 billion in FY25, according to data from the Petroleum Planning and Analysis Cell (PPAC), of which Qatar’s share was about 50%. According to government data, natural gas accounts for about 7% of the country's energy basket, and the government aims to take it to 15% by 2030.

India's overall natural gas consumption is projected to reach 297-365mmscmd by 2030 and 495-630mmscmd by 2040. Industrial and commercial demand is expected to grow 10-15% by 2030, showed projections by PNGRB.

India currently has eight operational onshore LNG terminals, offering a combined regasification capacity of 52.7mmtpa (million metric tonnes per annum), equivalent to 190mmscmd. Several other land-based terminals and floating storage regasification units (FSRUs) are in various stages of development.

“It is the need of the hour for India to develop such strategic gas storages. Several countries including China, US, Germany and Europe as a whole have set precedents in the case of such long-term storage infrastructure,” said Manas Majumdar, partner and leader, oil and gas at PwC India.

He added that although India has operational storage in terms of terminals, tankage and pipeline line-pack, there is a need to develop proper underground gas reserves. With far fewer import sources for natural gas than crude oil, the country needs dedicated artificial gas reserves to strengthen energy security.

Energy prices increased on Wednesday after Yemen's Houthi militia blocked the Bab-al-Mandab Strait, which connects the Red Sea to the Indian Ocean, a key route for energy flow from Yanbu port in Saudi Arabia.

Rituraj Baruah

Rituraj Baruah is a special correspondent covering energy, housing, urban affairs, heavy industries and small businesses at Mint. He has reported on diverse sectors over the last eight years including, commodities and stocks market, insolvency and real estate; with previous stints at Cogencis Information Services, Indo-Asian News Service (IANS) and Inc42.