NATURAL gas is a potential oil substitute with low pollutant emission levels that could have eased India's energy crisis in the late 1970s and 1980s. Its use is a typical example of India's short-sighted energy policies going awry. Till the mid-70s, about 50 per cent of natural gas from oil wells was flared because little attention was paid to its use. With the slow development of infrastructure and market, even in 1990-91 nearly 30 per cent of gas produced was flared.

Oil production, which increased nearly three-fold during the Sixth Plan, rose only at 3.3 per cent per annum during the Seventh Plan, requiring greater use of natural gas. Demand for natural gas has grown to 35 million cubic metres per day (MCMD) now and it is being increasingly seen as a source of power generation.

If the present growth rate continues, demand would rise to 175 MCMD by 2010 in a business-as-usual scenario. However, the TERI reports suggests all of the 180 MCMD of gas likely to be available then should be utilised. This would require huge investments in infrastructure and market development.

Some experts have criticised setting up gas-based plants exclusively to generate electricity. Jyoti Parikh of the Indira Gandhi Institute of Development Research says, "Natural gas should be optimally used in the fertiliser and petrochemical industry. At the most, thermal power projects should use natural gas as an auxiliary fuel to meet peak-load demand."

Production of oil is expected to increase only from new fields, and imports could continue to rise. The Planning Commission estimates if oil consumption increases at the projected rates, then the known oil reserves would last for less than 25 years.