Natural Gas: Bright future ahead - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Natural Gas: Bright future ahead

Jun 4, 2003

The major source of energy generation in India is coal. This apart, other sources include crude oil, natural gas and lignite. However, nuclear energy and hydro electricity also forms a small part of this. In the current article, we take a look at the importance of natural gas as an energy source. Though natural gas share as an energy generator has increased marginally in the past decade, we believe that the segment growth will pick up in the current decade.

Natural gas is a feedstock mainly in user industries like utilities, fertilizer and petrochemicals. Increasingly, these user industries are realizing the advantages of natural gas over other feedstock like naphtha and coal. Natural gas is a cleaner fuel and thus requires less secondary processes. The only disadvantage using natural gas is in transportation. The transportation in the gaseous form is difficult and it requires usage of 'liquifier' and 'regassifier' at the site. However, the advantages far exceed the disadvantage.

Due to this, the government is also encouraging the use of natural gas as a feedstock. For this, it too is focusing on raising the country's gas assets either through new exploration or through strategic import tie-ups. The exploration initiative has already shown signs of success.

In what can be considered FY03's largest natural gas discovery, Reliance hit upon 10 trillion cubic feet of gas reserves in Krishna Godavari Basin. Discoveries by ONGC and other players in the exploration front are expected to increase the supply side in the long term. With Reliance's commercial production expected to start from FY06, the share of natural gas as a source of energy is expected to increase. To put things into perspective, commercial production of Reliance natural gas from KG Basin alone will increase the production of natural gas in India by about 50% from existing levels of 30 bn cubic metres.

With the government opening more coal bed methane blocks for exploration, natural gas production is expected to increase in the long term. Secondly, Dahej Petronet LNG, a joint venture between ONGC, BPCL and Gail for importing 7.5 mtpa LNG from Qatar, is expected to commence imports towards the end of FY04. Once that happens, the demand supply mismatch will balance further. This is also encouraging news for gas transporters like Gail and Gujarat Gas. Gail is tapping Myanmar blocks and the fields in Assam and Bangladesh to increase the gas supplies in future. More such initiatives are likely to be directed towards this segment.

Consequently, we believe that natural gas, as a source of energy will see tremendous growth in the coming decade. As India reaches a comfort zone in supply side of natural gas, one may see widespread development based on this feedstock. Participants in this segment, whether explorers or transmission majors will benefit from this upturn going forward.

Equitymaster requests your view! Post a comment on "Natural Gas: Bright future ahead". Click here!


More Views on News

5 Green Energy Stocks to Watch as India Readies for a Revolution (Views On News)

Oct 13, 2021

The excitement around green energy stocks has opened up a huge contrarian opportunity in the traditional energy space.

Top Performing PSU Stocks over the Past One Year (Views On News)

Oct 1, 2021

After a decade of underperformance, PSU stocks have woken up. Here are the best performing PSUs of past twelve months.

Linde India Shares Hits New High. Up 230%+ in One Year (Views On News)

Aug 26, 2021

Linde India shares have surged sharply in the past few trading sessions. What's causing the rally?

ONGC Logs Massive Jump in Net Profit as Crude Oil Prices Double (Views On News)

Aug 16, 2021

Rising crude oil prices compensate ONGC's fall in production.

HPCL Shares Under Pressure After Profit Declines in June Quarter (Views On News)

Aug 5, 2021

Rising crude oil prices and forex woes weigh on HPCL's quarterly numbers.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

How to Find Your Next 10-Bagger in this Market (Profit Hunter)

Nov 19, 2021

The #1 make or break factor in your portfolio you shouldn't ignore.

MobiKwik IPO Opens for Subscription Soon. Key Things to Know Before Subscribing. (Views On News)

Nov 20, 2021

The Rs 19 bn issue is set to hit the market soon.


Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms


Dec 2, 2021 12:46 PM