Controlled prices major hurdle for growth of natural gas market: Mansingh

Government-controlled prices restrict the growth of the natural gas market which is detrimental. This was said by Petroleum and Natural Gas Regulatory Board (PNGRB) chairman L Mansingh. He was speaking on Thursday at the second day of the International Conference on Management of Petroleum Sector – ICOMPS 2010 – being held at School of Petroleum Management (SPM), Pandit Deendayal Petroleum University (PDPU), Gandhinagar.

On the likely investment in petroleum and natural gas infrastructure in the next five years, he said a conservative estimate would be around Rs. 76,000 crore to Rs. 84,000 crore. Of course, it could go up to Rs. 1.25 lakh crore, he added.

“As the government fixes oil and gas prices and also allocates the same, open market trading of the fuel cannot take place. Similarly, factors like dominance of Central public sector undertakings (PSUs) in the oil and gas sector and subsidization in sale of the products lead to distortions in the product market. In addition, infrastructural facilities are owned by PSUs, which prevent their optimum use,” he said in the keynote session - ‘Regulatory Issues in Oil & Gas Sector’.

The development of a competitive market for natural gas is beneficial to the country in many ways. It can lead to better price discovery, optimal use of energy resources, optimization of infrastructure and also attract major investment in exploration & production (E&P) and transportation & distribution (T&D) infrastructure as well, he added.

According to Mansingh, lower participation of bidders under the last round of the NELP, particularly foreign biggies, indicates that the process of determining prices should be left to market forces.

Mansingh also revealed that the late Andhra Pradesh Chief Minister, YSR Reddy, was impressed by the significant progress made by Gujarat for the development of natural gas market and wanted his home state to become another Gujarat on this front.

“Gujarat has the only functioning market for natural gas. I told him AP would have to develop infrastructure like Gujarat for T&D of gas,”said Mansingh.

The total number of geographical areas (GAs) covered under the gas grid network in the country stands at 25 and is expected to rise to 86 in the next three years. Similarly, the number of vehicles using CNG as fuel is expected to rise to 33 lakh in the next five years from 7 lakh at present, he added.

The ‘ICOMPS 2010’ conference was inaugurated on Wednesday by Benno Wilhelm, Professor of Production Management, University of Lausitz, Senftenberg, Germany, Bhavesh Patel, Director, SPM, PDPU, and Professor Sudhir Yadav, SPM, PDPU, Gandhinagar.

Addressing the inaugural ceremony of the three-day biennial event, Dr. Bhavesh Patel said, “In today’s world, food security and energy security are given equal importance by any nation.

Management of the petroleum sector is as important as discovering new oil and gas fields. Institutions like PDPU can provide a comprehensive solution to energy management.”