Gas demand was very low until the 1970s but started to pick up when ONGC’s Bombay High started producing in 1974. With the growth of gas production, it became necessary to develop the downstream part of the gas value chain. In 1984, state-owned GAIL was created to promote gas use and develop midstream and downstream gas infrastructure.
In 1991, India entered into a liberalisation process for the economy, and began to deregulate the gas market and disengage itself from Public Service Undertakings (PSU). GAIL started to build a transmission network with the first major transregional pipeline, the Hazira-Vijaipur-Jagdishpur (HVJ) completed in 1991, and gas distribution in major cities progressively took place over the following decade. The year 2009 therefore marks a turning point for the Indian gas market: with new supplies available, Indian gas consumption increased to 59 bcm in FY 2009/10, from 43 bcm in FY 2008/09.
The potential for growth of the natural gas market in India is tremendous; the power generation and fertiliser sectors being the main consumers. The Indian gas sector, like the whole energy sector, is dominated by state-owned companies. Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) have dominant upstream positions, while until 2006, Gas Authority of India Ltd (GAIL) alone had been responsible for pipeline gas transport.