The government had, in November 2020, announced plans to set up 50 LNG fuelling stations along the national highways, and the Golden Quadrilateral connecting Delhi, Mumbai, Chennai and Kolkata.
This was aimed at replacing diesel and petrol with cleaner fuel in long-haul vehicles and to achieve the target of a 15% share for natural gas in India’s total energy mix by 2030.
In the second phase of the expansion move, 1,000 LNG fuelling stations were to be set up at an investment of ₹10,000 crore over three years. However, the Russia-Ukraine conflict has sent LNG prices soaring and created a shortage of the fuel.
In May, Gazprom suspended the supply of 2.4 million tonnes per annum (mtpa) long-term LNG contract to Gail. This has not been reinstated so far.
Gail has tried to reduce the shortfall of 8-9 million metric standard cubic metres per day (mmscmd) by cutting down supplies to the fertiliser and power sectors and trimming utilisation of its own Pata petrochemical plant (in Uttar Pradesh) to 40%.
Over 80% of India’s LNG supplies are met through long-term contracts and the country has been shopping for term LNG from other countries including Angola and Algeria. “Phase II is on hold simply because, one, you need LNG, and two, you need to utilise the 50 stations that have been set up so far. If LNG prices are high, there won’t be any takers,” a senior industry executive involved in setting up LNG fuelling stations said.
A lack of LNG trucks is also one reason why Phase II expansion has not been moving forward, the executive added. “LNG trucks do not exist. All trucks are currently under testing, and none are available in the market,” the person said.
In September, Blue Energy Motors launched India’s first LNG fuelled truck at its plant in Chakan, Pune. The truck has the industry’s first 1,000-litre fuel tank which provides a range of up to 1,400 km in a single fill.
LNG is up to 40% cheaper than diesel and can come in as a fuel replacement for heavy vehicles.
On a single fill, LNG heavy vehicles can travel over 600-1,000 kilometres. In India, the transport sector accounts for 40% of total diesel sales. LNG is considered an environment friendly alternative as there is no sulphur dioxide emission and nitrogenous emissions are reduced by 85%.
“We have not set up any of the LNG stations so far. However, in phase I, the work of commissioning two LNG stations at BPCL OSTS Avinashi, Tamil Nadu and Pananchery, Kerala, are at an advanced stage. In fact, presently unfavourable LNG prices are the major retarding factor to take off this value proposition,” said a BPCL spokesperson.
In the first phase, BPCL has planned 12 LNG stations, which were expected to be increased to 35 LNG stations in the second phase.
“All such locations have been identified; however, necessary action has been initiated only for phase I locations as of now,” the spokesperson added.