India Mulls Building Strategic Natural Gas Storage Facilities As A Safeguard Against Supply Disruptions And Price Volatility

India is considering the construction of strategic natural gas storage facilities within the country, similar to the country' strategic crude oil reserves.

The aim is to have a substantial gas stockpile that can be utilised during emergencies and supply disruptions. It would also serve as a safeguard against extreme price volatility in the international market.

The idea is still in the preliminary stage, and discussions have taken place with global players specialising in gas storage, according to petroleum secretary Pankaj Jain, reports Indian Express.

“We don’t have (strategic) gas reserves…We probably need some help at some point. But it is something that we are looking at…We have reached out to a few (global companies with gas storage expertise),” Jain was quoted as saying by Indian Express.

However, the petroleum secretary refused to disclose names of the international firms that the ministry or oil and gas PSUs might be in talks with.

While India already possesses 5.33 million tonnes of strategic crude oil reserves, capable of meeting around 9.5 days of the country's oil demand, there are currently no strategic natural gas storage facilities.

However, given the expected significant growth in gas consumption in the coming years, the need for such facilities is apparent.

It should be noted that the existing capacity of underground caverns for oil storage is set to be expanded by an additional 6.5 million tonnes in the second phase of the project.

Regarding the establishment of strategic gas storages, Jain stated that the government has yet to decide whether it will be done independently or with the involvement of the private sector.

Currently, the focus is on assessing the feasibility and technical viability of having such storage facilities.

According to Jain, various options are being considered, including using abandoned gas wells for natural gas storage and developing underground storage in different types of subsurface formations.

India relies on imports to meet about half of its natural gas needs, making it a net importer.

By 2030, India plans to raise the share of natural gas in its primary energy mix from just over 6 per cent to 15 per cent.

However, as one of the major importers of liquefied natural gas (LNG), India faced challenges last year due to global supply tightening and surging gas prices following Russia's invasion of Ukraine.

Natural gas can be stored in various ways, including underground in depleted reservoirs in oil and gas fields, natural aquifers, and salt caverns. It can also be stored as LNG in large above-ground tanks.

In the United States, most existing natural gas storages are located in depleted oil and gas fields near consumption centres, according to the US Energy Information Administration (EIA).

Gas storage facilities are not limited to the United States. Several European countries, Canada, and China, among others, have their own storage facilities.

The majority of European Union (EU) member states have gas storage facilities, with Germany, Italy, France, the Netherlands, and Austria accounting for two-thirds of the EU's total storage capacity.

In anticipation of a potential energy crisis in the winter of 2022 due to the conflict in Ukraine, EU member countries filled their gas storage facilities to 90 per cent capacity on average by October 2022.

The Indian Express previously reported that Engineers India (EIL), a government-owned engineering consultancy firm, is studying the feasibility of developing salt cavern-based strategic oil reserves in Rajasthan.

Experts believe that these caverns can also be used for storing natural gas.

Currently, no Indian company, including EIL, possesses the necessary technical expertise to construct salt cavern-based strategic hydrocarbon storage.

To address this, EIL has partnered with Germany's DEEP.KBB GmbH, a company specialising in cavern storage and solution mining technology, to gain access to the required knowledge and technology.