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Description | Overview | History | Natural gas producing countries | Indian natural gas market | Major trading centers

Natural gas is a fossil fuel, a mixture of hydrocarbon gases largely consisting of methane, found with petroleum and coal. In its pure form, the gas has no shape, color or odor and is used in the preparation of organic compounds, cooking food, generating electricity etc. Natural gas is a clean combustible and high-energy emitting gas and serves as an important fuel to the world as it produces a lesser extent of harmful byproducts on burning.

The gases other than methane that join together to form natural gas are ethane, propane, butane, carbon dioxide, oxygen, nitrogen, helium etc. When all these gases are present in the natural gas, it is termed as wet natural gas and if all these gases are removed, it is termed as dry natural gas.


Natural gas forms the most cleanest and environment friendly sources of energy. It does not emit much of the harmful substances that other sources of energy like coal and oil do. The gas is combustible and that is why it is used in a numerous applications. As cooking fuel, as a transport fuel, as a lighting fuel, the gas is gaining popularity and is accepted in each and every aspect of daily life. But there are some precautions to be taken while working with natural gas as, if the gas is captured or blocked, it may explode.

The total natural gas reserves present in the world figure up to around 6112 trillion cubic feet. The largest reserves are with Russia with an estimated reserve of 1680 trillion cubic feet. Though maximum reserves are with Russia but United States dominates the world production of natural gas with 21% share in the world production of 115994 billion cubic feet. The dry natural gas production is around 95.2 trillion cubic feet dominated by Russia. In context of world natural gas consumption, United States again ranks 1st consuming approximately 22.4 trillion cubic feet in the world total production of around 95.5 trillion cubic feet, followed by Russia with a consumption figure of 15.3 trillion cubic feet. With the current rate of consumption the total world consumption is estimated to increase by a staggering 70% till the year 2025.

The trade figures in natural gas have shot up since the invention of an appropriate mode of transport of the gas. The pipelines connected among the various nations serve as one cost effective mode of transportation and storage but it is almost impossible to stretch these pipelines across the oceans. World’s total export figures of natural gas are approximately 667600000000 cubic meters, Russia exporting the major part of it. The list of the major natural gas exporting nations is given below

  • Russia

  • Canada

  • European Union

  • Algeria

  • Norway

  • Netherlands

  • Turkmenistan

  • Indonesia

  • United States of America

  • Malaysia

The world import figures related to the natural gas is even higher than the export figures as the number of countries that import the gas is larger. All the importing countries contribute to a world import figures of around 696000000000 cubic meters. The major countries that import natural gas are

  • European Union

  • United States of America

  • Germany

  • Japan

  • Ukraine

  • Italy

  • France

  • South Korea

  • Netherlands

  • Belarus

  • Spain


Natural gas is a fossil fuel in a gaseous form. Initially, the man did not know about its existence on earth and the gas was a source of mystery for many early civilizations. At that time, as a matter of coincidence, the natural gas leaks on the earth’s crust sometimes got ignited from the effect of lightening. The references of the most popular fire are about fire on mount Parnassus in around 1000BC, which got much attention and was considered divine. Other cultures too have references of such divine fire springs that were actually a result of the natural gas escaping from the earth’s crust. In around 500BC, Chinese discovered the concept of natural gas and developed various methods to utilize it. They used bamboo sticks to trap the gas and used it to boil the sea water to make fresh water out of it.

The king of Persia built his kitchen near an ignited gas flame in around 1st century showing the world that gas could be used for cooking food also. It took a long time before the gas was commercialized in 1785 and Britain became the first country to do that. Now the natural gas got manufactured from coal and was used to provide lighting to the houses and streetlights. This added to the popularity of the gas and in 1816, it was brought to the United States to light the streets of Baltimore and Maryland. William Hart, known as the father of natural gas in America, established the first natural gas company in the United States. Since then, America transformed into the most dominant natural gas player in the world as the gas industry flourished with the new developments and inventions in context of both the extraction and transportation of gas. New uses of natural gas were developed throughout the world, as it grew further popular as a source of energy in the world after petroleum and coal.

Natural gas producing countries

Natural gas is the third most important energy resource after oil and coal. The gas was formed when the organic particles under the earth’s crust got transformed with the effect of constant high temperature and pressure and decomposition by the microorganisms. Like other fossil fuels that serve as sources of energy, natural gas too is a non-renewable type. That means that the gas once used cannot be recycled for further use and that is why the natural gas reserves are limited. The total gas reserves in the world are estimated to be around 6112 trillion cubic feet. Though these reserves are present throughout the globe, most of them are present in the Eurasia region with approximately 42% of the world’s total reserves, followed by the Middle East with 34% share. The countries that possess the maximum quantity of natural gas along with their reserve level as on January 1, 2006 are mentioned in the list below

  • Russia (1680 trillion cubic feet)

  • Iran (971 trillion cubic feet)

  • Qatar (911 trillion cubic feet)

  • Saudi Arabia (241 trillion cubic feet)

  • United Arab Emirates (214 trillion cubic feet)

  • United States of America (193 trillion cubic feet)

  • Nigeria (185 trillion cubic feet)

  • Algeria (161 trillion cubic feet)

  • Venezuela (151 trillion cubic feet)

  • Iraq (112 trillion cubic feet)

Though United States has much lesser natural gas reserves as compared to Russia but still it leaves Russia behind in context of production. USA contributes to around 21% natural gas in the world’s total annual produce of 115994 billion cubic feet. The major producers of natural gas in the world with their average annual production figures are

  • United States (24119 billion cubic feet)

  • Russia (21768 billion cubic feet)

  • Canada (7609 billion cubic feet)

  • Algeria (5820 billion cubic feet)

  • Iran (4556 billion cubic feet)

  • Norway (4177 billion cubic feet)

  • United Kingdom (3902 billion cubic feet)

  • Indonesia (3155 billion cubic feet)

  • Netherlands (2576 billion cubic feet)

  • Saudi Arabia (2399 billion cubic feet)

The country with the highest dry natural gas production is Russia with 21.8 trillion cubic feet.

Production of natural gas in India

India is not a major producer of natural gas. Currently India produces around 31777 million cubic meters of natural gas annually. At the time of independence in 1947, the production in the country was negligible but with time the need for introducing natural gas as source of energy was understood and now natural gas is being preferred in place of other fuels, as it is an environmental friendly and cost effective fuel.


The production in the country is in the hands of both the private and public sector companies, majority of the production being done off shore. The major companies that are indulged in the production of natural gas in India are

  • Oil and Natural Gas Corporation Ltd (ONGC)

  • Oil India Ltd (OIL)

  • Private Joint Venture Companies

Oil India limited (OIL) produces the maximum on shore quantity of natural gas in the country with a production figure of around 2010 million cubic meters. The off shore production is dominated by Oil and Natural Gas Corporation Ltd (ONGC) with a production level of 17444 million cubic meters. State wise, Gujarat is the largest natural gas producing state in India. The list of the major states involved in the production of natural gas is given below

  • Gujarat (3593 million cubic meters)

  • Assam/Nagaland (2250 million cubic meters)

  • Andhra Pradesh (1707 million cubic meters)

  • Tamil Nadu (678 million cubic meters)

  • Tripura (496 million cubic meters)

  • Rajasthan (213 million cubic meters)

  • Arunachal Pradesh (40 million cubic meters)

Indian natural gas market

Natural gas is relatively a new source of energy to India and does not share a long background with the country, but currently it is the fastest growing energy source. The gas is widely accepted in the country now in various applications, as it possesses various advantages over the other resources. Due to the pollution level going up in the metropolitan cities of the country because of the constant industrialization, the state governments have implied new rules stating the use of compressed natural gas in the public transport vehicles.

India’s natural gas production accounts up to around 31777 million cubic meters. ONGC, OIL, and private joint venture companies undertake the production of the gaseous fuel in the country. The onshore production level (i.e. 8977 million cubic meters) is comparatively lesser than the production level off shore (i.e. 22800 million cubic meters). Gujarat is the largest natural gas producing state in producing around 3593 million cubic meters annually. The production has risen since 1970s when the Bombay high fields were developed and is still in the up trend. The main demand for the natural gas in the country arises from the LPG sector as half of the LPG is produced with the help of natural gas. Natural gas forms the key component in the growth of the nation as it is needed in the industrial, commercial, transport and domestic sectors of the country.

As the consumption in the country is rising constantly and the production not enough to satisfy the domestic demand, India has to import large quantities of natural gas. 22% of the country’s domestic consumption is fulfilled by the imports. The country imports gas through various pipelines projects from the countries like

  • Iran (IPI pipeline project)
  • Myanmar (MBI gas pipeline project)
  • Turkmenistan (TAP pipeline)

Market influencing factors

  • Demand and supply scenario of OPEC nations
  • Fluctuation in the value of dollar
  • Demand level from the importing countries
  • Weather conditions in the gas producing countries
  • Domestic demand from the various sectors of the country
  • Government policies and regulations
Major trading centers of natural gas

The major commodity exchange in which natural gas is traded is New York Mercantile Exchange (NYMEX).

Natural gas was not traded in India until recently, when natural gas futures were introduced in the country in Multi Commodity Exchange of India Ltd (MCX)

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