OAS Mains Q&A: Natural Gas Marketing Reforms

Context

On 7th October, 2020, the Cabinet Committee on Economic Affairs approved ‘Natural Gas Marketing Reforms’, taking another significant step to move towards gas based economy. (Source: PIB)

Question

Recently CCEA approved Natural Gas Marketing Reforms. Highlight its Key Points and Significance

Sample Answer

The Cabinet Committee on Economic Affairs chaired by the Prime Minister Shri Narendra Modi has approved ‘Natural Gas Marketing Reforms’, taking another significant step to move towards gas based economy. The objective of the policy is to prescribe standard procedure to discover market price of gas to be sold in the market by gas producers, through a transparent and competitive process, permit Affiliates to participate in bidding process for sale of gas and allow marketing freedom to certain Field Development Plans (FDPs) where Production Sharing Contracts already provide pricing freedom.

Key Points

  • The policy aims to provide standard procedure for sale of natural gas in a transparent and competitive manner to discover market price by issuing guidelines for sale by contractor through e-bidding.
  • It has also permitted Affiliate companies to participate in the bidding process in view of the open, transparent and electronic bidding. This will facilitate and promote more competition in marketing of gas.
  • The policy will also grant marketing freedom to the Field Development Plans (FDPs) of those Blocks in which Production Sharing Contracts already provide pricing freedom.
  • The whole eco-system of policies relating to production, infrastructure and marketing of natural gas has been made more transparent with a focus on ease of doing business

Significance

  • Bringing Uniformity:This will bring uniformity in the bidding process across the various contractual regimes and policies to avoid ambiguity and contribute towards ease of doing business.
  • Push to Atmanirbhar Bharat Abhiyan:These reforms will prove very significant for Atmanirbhar Bharat Abhiyan by encouraging investments in the domestic production of natural gas and reducing import dependence.
  • Gas based Economy:These reforms will prove to be another milestone in moving towards a gas based economy by encouraging investments. The domestic production will further help in increasing investment in the downstream industries such as City Gas Distribution and related industries.
  • Environment Friendly:The increased gas production consumption will help in improvement of environment by reducing the dependency on other fossil fuels like petrol and diesel.
  • Creating Employment:These reforms will also help in creating employment opportunities in the gas consuming sectors including MSMEs.

Facts for Prelims

  • Natural Gas is also known as fossil gas, it is a non-renewable naturally occurring hydrocarbon gas mixture consisting primarily of methane, but commonly including varying amounts of other higher alkanes, and sometimes a small percentage of carbon dioxide, nitrogen, hydrogen sulfide, or helium.
  • Natural gas is not used in its pure form; it is processed and converted into cleaner fuel for consumption. Many by-products are extracted while processing of natural gas like propane, ethane, butane, carbon dioxide, nitrogen etc., which can be further used.
  • Natural gas in compressed form is used as fuel for vehicles which is known as CNG. It is used as fuel for boilers and air conditioners worldwide. It is used for making fertilizers also, mainly ammonia.It is also used for cooking in domestic households and a transportation fuel for vehicles.

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