Petronet LNG, Gruner sign agreement for 1,200-cr JV for CBG projects

Petronet LNG Ltd is diversifying into domestic renewable gas production with a proposed investment of Rs 1,200 crore to establish compressed biogas (CBG) plants in partnership with Gruner Renewable Energy. The move comes amid geopolitical uncertainties and supply disruptions that have exposed the vulnerabilities of India’s dependence on imported liquefied natural gas (LNG).

The two companies have signed a binding term sheet to form a 50:50 joint venture for developing the facilities, each with a production capacity of 18 tonnes per day. The CBG plants will have a combined capacity of 180 tonnes per day, equivalent to approximately 63,000 tonnes annually, assuming 350 operating days. However, the companies have yet to announce the project locations and commissioning schedules.

“The Joint Venture will establish 10 CBG plants, each with a production capacity of 18 TPD, with a total estimated capital outlay of Rs. 1,200 crore,” said Petronet LNG.

Petronet’s diversification comes as its core LNG business faces supply challenges. Throughput at its flagship Dahej LNG terminal declined to 192 trillion British thermal units in April-June 2026, compared with 207 trillion units during the corresponding period last year. Disruptions affecting Qatari gas supplies amid restrictions around the Strait of Hormuz, coupled with a sharp increase in spot LNG prices, underscored the risks associated with international energy market volatility.

Although the proposed CBG capacity is modest compared with India’s annual LNG imports of approximately 25.5 million tonnes, the venture will provide Petronet with an additional domestic revenue stream and an entry into the renewable gas sector.

The investment complements the company’s larger expansion programme, which includes a Rs 20,685-crore integrated petrochemical complex at Dahej and a Rs 6,355-crore LNG terminal at Gopalpur. The latter is expected to increase Petronet’s regasification capacity by nearly 18% to 32.5 million tonnes annually.

Government blending mandates could further support the CBG venture. City gas distribution companies must progressively blend CBG with compressed natural gas for transport and piped natural gas for households, with obligations rising to 3% in FY2027 and 5% from FY2029.

The project’s success will depend on securing consistent supplies of agricultural and organic waste to ensure reliable plant operations and commercially viable production.