Opening of natural gas field to relieve a fuel-starved India

India’s biggest natural gas field will transform the energy landscape when production begins this month, eventually doubling the nation’s supply of the cleaner-burning fuel and reducing its reliance on oil.

The $8.8 billion project of Reliance Industry will mean many things to India’s one-billion-plus people: more power supply from idled generators starved of gas; lower carbon emissions than its coal generator sector; less need for costly naphtha or imported liquefied natural gas, or LNG, for fertilizer firms aching for local alternatives.
But for investors, the D-6 field in the Bay of Bengal heralds a more important, but less apparent, sea change.

The gas will be sold at a more than twice the price fixed by government for sales from fields of state firms.

While it is only the first of many steps needed to increase investment by deregulating more of the protected energy industry, still riddled with state-owned refiners and pricing distortions caused by state control over power and fuel, it represents an acknowledgement that market mechanisms play a vital role.

International Herald Tribune