City Gas Firms Shift Strategies Amid Iran War-Induced Supply Challenges
Iran war forces city gas firms to redraw strategies amid gas supply squeeze, shift focus to PNG expansion
The Economic Times
Image: The Economic Times
City gas distribution (CGD) companies in India are adjusting their strategies due to supply constraints caused by the Iran war. They are focusing on expanding piped natural gas (PNG) connections, which surged to 12,000 per day, and increasing investments to meet rising demand for domestic gas amid a volatile market.
- 01CGD companies are pivoting towards domestic gas connections due to supply issues from the Iran war.
- 02Piped natural gas (PNG) connections have surged to 12,000 per day, a significant increase from previous months.
- 03Bharat Petroleum Corporation Ltd (BPCL) plans to invest ₹1,700 crore (approximately $205 million USD) this fiscal year to expand its gas business.
- 04Government support is accelerating PNG network expansion with faster approvals and reduced costs.
- 05Gas prices have fluctuated between $18-18.5 per unit, complicating long-term contracts.
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In response to the supply squeeze caused by the Iran war, city gas distribution (CGD) companies in India are revising their strategies to focus on expanding piped natural gas (PNG) connections. Over the past month, PNG connections surged to 12,000 per day, a fourfold increase from 3,000 earlier, prompting CGD firms to hire more skilled labor to meet the rising demand. Bharat Petroleum Corporation Ltd (BPCL) plans to invest ₹1,700 crore (approximately $205 million USD) this fiscal year to enhance its gas business, including expanding the PNG network. Traditionally, the PNG segment has been less profitable due to high infrastructure costs per household, but the current government push for PNG expansion is leading to faster approvals and reduced costs. The market remains volatile, with gas prices fluctuating between $18-18.5 per unit, complicating long-term supply contracts. Despite these challenges, CGD companies are optimistic about increasing PNG connections, with Indraprastha Gas Ltd (IGL) projecting a rise from 370,000 to 500,000 total connections.
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The shift towards PNG connections could lead to lower energy costs for households in the long run as the government supports the expansion of the PNG network. However, initial connection costs remain a barrier for many consumers.
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