Achieving 15% gas in energy mix to require policy changes: Shell India Chair

Raising the share of natural gas in the country’s energy mix will require targeted policy intervention such as differentiated tariffs and an easy access to pipelines in select sectors such as gas-to-power generation and liquefied natural gas (LNG) trucking, Mansi Tripathy, chairman, Shell group of companies in India, and vice-president, Shell Lubricants Asia Pacific, tells Subhayan Chakraborty and Shreya Jai in an interview on the sidelines of India Energy Week in Delhi. While Shell is planning a major initiative to re-refine waste oil in its core business of lubricants, it is also adapting cutting-edge artificial intelligence to enable efficiency and run complex energy simulations. Edited excerpts.

How does Shell perceive the increasing its focus on natural gas in India?

 The most critical fuel for India is gas. As the largest global player in LNG, Shell sees potential in expanding the role of gas in India. We have been discussing increasing gas penetration in India from 6 per cent to 15 per cent for years, yet in the past five years we have remained at 6 per cent. Achieving 15 per cent will require significant policy changes. One key area is optimising the end consumption of gas and removing bottlenecks. For instance, globally, gas-to-power is a major sector, but in India, its use remains minimal. One challenge is the standard tariff on LNG, which does not differentiate whether the gas is used for power generation or something else. Additionally, standard gas-to-power terminals have not been established due to a lack of demand. Infrastructure investment, such as pipeline access, is also lacking due to uncertainty about gas availability. Demand aggregation could help mitigate these issues by offsetting price fluctuations. Another critical application is gas for heavy transport. Compared to China, India lags in this sector. Other countries have accelerated gas adoption by aggregating potential demand, enabling original equipment manufacturers to invest in infrastructure and securing financial support for manufacturers and consumers. A well-structured ecosystem is essential for scaling up gas usage, and policy intervention is the key to make this happen.

Among these segments, where do you see a growth potential in terms of business?

Gas to power as well as gas for heavy equipment and transport are two areas where we feel very passionate. We do work on that globally, across China, Europe and America. We have worked with the regulators, the customers, and financing bodies. We can bring in that knowledge that can actually pioneer it in this country as well.

There has been a push for LNG trucking from the industry and some policymakers. What do you think is holding it back?

Ultimately it’s just a matter of right pricing. For consumers, LNG needs to be more competitive than what they are buying now: Diesel. LNG pricing keeps fluctuating globally. In turn, it reduces the surety of what we can price for the end consumer. The price is also linked to tariff rates. Right now, there’s a flat Customs duty on LNG import. LNG for trucking could be distinguished through a mechanism and different import duties placed on it. Short-term demand-side incentives that can support early adopters to shift to LNG can be the allocation of some domestic gas or incentives such as toll exemption — and a reduction in the GST (goods and services tax) rate on LNG kits from 28 per cent to 5 per cent.

What are your plans for the lubricants business?

We are working on re-refined oil as an important part of the overall circular economy. We are partnering with Mahindra & Mahindra and its chain of workshops to collect all the waste oil, and then give them certification, which they can use for their sustainability targets. We are one of their preferred suppliers for lubricants and are extending this service as part of that partnership. Meanwhile, we are working with our vendors’ ecosystem to potentially re-refine waste oil. Globally, we now have technology available.

Has Shell begun to tap into artificial intelligence (AI)?

Shell is forefronting a lot of innovation and digitisation, and driving new technologies in India through our technology centre. We have three capability centres in the country, and 13,000 employees — one of our biggest footprints globally. We are talking a lot about how AI can enable more efficiency, safety, as well as the best usage of all the assets globally. For example, we are working with a startup by the name Detect Technologies, which has its own proprietary platform called T-Pulse and a combination of physical assets and digital assets. They have robotic eyes, drones, and sensors, which can be placed in any asset and are able to tell if there is any safety violation that can potentially happen. This includes people violation or any threat coming in, or any unsafe act that is happening in the building — in real-time. It can also be put within pipelines to detect the rate of corrosion. We are now working with our partner NVIDIA in terms of running complex energy simulations up to a million times faster than traditional methods. We are trying to look at it from an end-to-end perspective.

Do you have specialised products for electric vehicles (EVs)?

We provide a full suite of fluid management for EVs. We have a full range of lubricants or EV fluids, including transmission fluids, specialised grease, and cooling fluids. Some are for usage till end of life, while just have to be used once. They are best in class from an efficiency point of view. I think we are the leading player. This was related more to our lubes programme, where we went to large fleets and we started sharing with them a telematic system to gauge their efficiency. This depends on the behaviour of the drivers, their driving practices, non-productive time, etc. Hence, the overall productivity of the fleet itself rises. On a net basis, this gives higher revenue to fleet operators because they are able to improve efficiency, reduce cost, use the fuel for a longer period of time, and that has helped us to grow revenue.

What is the market for re-refined lubricants like in India?

It’s at a nascent stage. Currently, you are left with about 60 per cent of lubricants at the end of life. Of that, we know 20 per cent is sold as secondary fuel and burned, releasing toxins. People buy it from a local vendor, and it has a revenue mechanism right now. The balance is unaccounted right now. Where it goes is not known. So, we have a responsibility for the value chain. We are in conversation with other players including Indian Oil, Bharat Petroleum and Hindustan Petroleum. The government is talking about ensuring 5 per cent of what gets back is reasonably settled

As appeared in the Business Standard