Singapore: The launch of an online portal by GAIL (India), allowing third-party access to its natural gas pipeline network, would ensure transparency and permit companies to understand the infrastructure further, analysts said on Tuesday.
GAIL, India’s biggest gas marketing and trading firm, launched an online portal on Monday for companies to book natural gas pipeline capacity. The state-run utility, which operates more than 11,400 kilometres of natural gas pipelines across various parts of India, has been providing third-party access to natural gas pipelines since 2004.
GAIL has served about 100 to 150 customers over the past few years, and, this would be the first time the company has taken the process online. “It’s a positive step towards introducing further transparency into the market,” said Nicholas Browne, senior gas analyst at energy consultancy Wood Mackenzie.
“I haven’t heard of this mechanism elsewhere in Asia although other markets such as Japan have introduced third-party operators, so a visible step towards separate ownership of transmission.”
While GAIL has said the portal was to bring transparency in the way pipeline capacity is sold, the move could help the utility convince the Indian government that it is not blocking access to the market as it faces the threat of being broken up, said Browne.
The government had said in January it wanted to split GAIL into two companies - one for laying pipelines and the other for marketing and petrochemicals - to encourage more transparency between the two operations, but has since appeared to have changed its position.
India, the world’s third-biggest energy consumer, is building infrastructure, including pipelines and import facilities, to raise the share of gas in its energy mix to 15 percent by 2030 from the current level of about 6.5 per cent.
India’s imports of liquefied natural gas (LNG) surged by 20 per cent in the first half of this year, compared with the same period a year earlier, said consultancy IHS Markit’s senior analyst Vidur Singhal.
“With this initiative, there could be more visibility on available pipeline capacity and greater push for short-term LNG trades directly between buyers and sellers,” he added.
However, constraints to increase the country’s LNG imports still remain. “The bigger constraint is actually the quantity of pipelines rather than open access,” Woodmac’s Browne said, adding that India remains critically under-served by pipelines.
“Pipeline construction in India is notoriously difficult ... as such, companies have proposed building their own pipelines to avoid being reliant on GAIL’s construction schedules.” GAIL is working on increasing the gas grid by another 5,000 kilometres, connecting eastern and north-eastern India.