ONGC Plans India’s First Strategic Natural Gas Reserve in Depleted Wells

ONGC Plans India’s First Strategic Natural Gas Reserve in Depleted Wells

According to two people familiar with the matter, the company intends to launch the project as a pilot program. The primary consideration for this approach is the geological suitability of depleted wells, which are already capable of handling high natural gas pressures and possess the necessary infrastructure for storage, significantly lowering capital expenditure compared to other methods like salt caverns.

Strategic Rationale and Energy Security

The move toward developing a strategic gas reserve follows the failure of previous government plans to utilize underground salt caverns, which were abandoned due to high costs and technical complexities. India currently imports approximately 55% of its natural gas requirements, a dependency valued at roughly $15 billion annually.

The need for a buffer has become increasingly urgent due to ongoing conflicts in West Asia, which have disrupted global energy supplies and heightened concerns regarding the security of transit routes such as the Strait of Hormuz. Data from S&P Global Commodities at Sea indicates that transit through the Strait has dropped significantly, with only 16 vessels recorded on July 20 compared to pre-war levels exceeding 130 vessels.

It is the need of the hour for India to develop such strategic gas storages, said Manas Majumdar, partner and leader of oil and gas at PwC India. He noted that countries such as China, the US, and Germany have already established precedents for long-term storage infrastructure.

Project Scope and Operational Models

While the primary objective is to mitigate emergency supply disruptions, industry experts suggest incorporating a commercial component to ensure the project remains financially viable. Rajesh Mediratta, managing director and chief executive of the Indian Gas Exchange, proposed a model where a portion of the reserve—for example, 2 billion cubic metres (BCM) out of a total 5 BCM—could be utilized for commercial trading and refilling.

This will develop a functional revenue model as witnessed in Europe, Mediratta stated, emphasizing that depleted fields should be the first preference for these facilities.

Context of India’s Energy Goals

The initiative aligns with broader national efforts to increase the share of natural gas in India’s energy basket from the current 7% to 15% by 2030. According to data from the Petroleum Planning and Analysis Cell (PPAC), India’s natural gas imports reached $14.9 billion in FY25, with Qatar accounting for approximately 50% of the supply.

Projections from the Petroleum and Natural Gas Regulatory Board (PNGRB) indicate that India’s overall natural gas consumption is expected to reach between 297 and 365 million standard cubic metres per day (mmscmd) by 2030, climbing to 495–630 mmscmd by 2040. Industrial and commercial demand is anticipated to grow by 10–15% by 2030. Currently, India operates eight onshore LNG terminals with a combined regasification capacity of 52.7 million metric tonnes per annum (mmtpa).

In addition to the current proposal, the PNGRB has considered recommending that the government establish overground storage tanks near existing LNG terminals. ONGC’s move to explore depleted wells follows its recent announcement of plans to build a 1.75 million-tonne strategic crude oil storage facility, adding to India’s existing strategic petroleum reserves of 5.2 million tonnes. Queries sent to ONGC and the Union petroleum ministry regarding the specific timeline for the feasibility survey remained unanswered.