Shell focuses on enabling LNG-based mobility in India, set to foray into CBG

New Delhi: Shell India is seeking to play a major role in attempts to build a green transport ecosystem in the country by displacing diesel – one of the dirtiest fuels -- with liquified natural gas, or LNG.

In addition, alongside its conventional focus on LNG, it may also make a foray into compressed biogas as it looks to expand its footprint in India's clean energy ecosystem.

In an interview, Nakul Raheja, country head, Shell Energy India said that easing LNG prices over the past several months have led to a greater interest from all stakeholders for increasing the network of LNG suppliers for transport.

Among vehicles, LNG is mostly used by heavy-duty and long- haul trucks.

“We are very excited by the opportunities emerging in the gas market in the next few years. We were one of the early movers in the gas market by taking up a position in Hazira (Gujarat) and setting up the Hazira LNG terminal nearly 20 years ago now. Three-and-a-half years ago we added a truck loading unit at Hazira which allows us to send out LNG which serves not only industrial customers but feeds into the network which is coming up for LNG as a transport fuel," Raheja said.

He said there was an “incredible opportunity" in India to displace diesel with LNG in heavy duty vehicles.

"And we see this as a multi-million dollar market over the next 10 years and that requires more import of LNG and the creation of downstream infrastructure to dispense that LNG as well as the availability of trucks that can run on LNG and that entire ecosystem is now working at pace to make that opportunity happen over the next few years."

He noted that in the past few months there has been increasing interest in the entire ecosystem, including investors, LNG stations, OEMs (original equipment manufacturers) who would manufacture LNG-fueled vehicles, retrofitters who would convert diesel-fueled trucks into LNG-fueled trucks, LNG suppliers and the government.

"A big driver for this is that the LNG prices are now back in the range where they make sense for the customer. There is a lot of energy being put into this space. More and more sites are getting commissioned which can dispense LNG," he said.

Spot Asian prices of LNG current hover in the range of $10-12 per mmBtu (million metric British thermal units), compared with about $18-19 per mmBtu a year ago. Going ahead, in the next year or two prices may ease further with supplies coming in from LNG capacities coming up in the US and Qatar.

To expand its portfolio of offerings in India's gas ecosystem, Shell is also looking at entering the compressed biogas (CBG) space.

"We are also tracking developments in the compressed biogas space or renewable natural gas to see how we can add that to our portfolio as well and have our gas customers look to further decarbonize their gas supply chain how could we introduce CBG as part of that.

A lot of our customers are switching to gas as it makes both economic sense and helps reduce their carbon footprint. As they go forward they make look for solutions which may help in further reduction in their carbon footprint and CBG plays a role in that space," he said.

He noted that Shell is already a major player in the CBG space after its acquisition of Nature Energy, a CBG producer in Europe in February last year.

"As the needs of the Indian customers evolve we want to be ready with offerings in this space as well for our customers. So, its basically its a strategy that's driven sure by customer's needs and making sure we have got something that's relevant to them when they need it," Raheja said.

CBG is produced from agricultural residue, cattle dung, solid waste, sewage treatment and other such waste or biomass. It is similar to compressed natural gas (CNG) and can be used as a green fuel in industries and automobiles. It is also gaining massive interest as the government has mandated its blending with CNG and piped natural gas (PNG) starting FY26.

On the plans for the company to expand capacity of the Hazira LNG terminal, at Hazira port in Gujarat, Raheja said that there are no concrete plans as yet but as the demand grows the company would look at expanding its role in the value chain.

"Hazira is an excellent location for an LNG terminal. Hazira has the scope and the space to expand even beyond 20 million tonnes. As demand grows in the country, we are working on various growth opportunities to see how we can expand that role Hazira plays in that value chain."

As appeared in Mint