Petronet LNG is entering India’s compressed biogas (CBG) sector through a proposed joint venture with Gruner Renewable Energy, committing an estimated Rs 1,200 crore to establish 10 plants with a combined production capacity of 180 tonnes per day.
The company has signed a binding term sheet with Gruner to set up the venture on an equal 50:50 ownership basis. Each facility will have a capacity of 18 tonnes per day. The proposed investment marks Petronet’s first major move into large-scale domestic gas production as it looks to diversify beyond its core liquefied natural gas (LNG) business.
The companies have yet to disclose the locations of the proposed plants or their expected commissioning schedules.
The diversification comes amid supply disruptions and price volatility in the global LNG market. Petronet’s Dahej LNG terminal handled 192 trillion British thermal units (TBtu) during the April-June 2026 quarter, down from 207 TBtu in the year-ago period. Disruptions affecting Qatari gas supplies amid restrictions around the Strait of Hormuz contributed to the decline, while higher spot LNG prices underscored the exposure of import-dependent businesses to geopolitical risks.
At full capacity, the 10 CBG plants could produce around 63,000 tonnes annually, assuming 350 operating days. Although this would be small compared with India’s annual LNG imports of approximately 25.5 million tonnes, the project would give Petronet access to the domestic renewable gas market and diversify its sources of revenue.
The proposed CBG investment is part of a broader portfolio of expansion projects. Petronet is investing Rs 20,685 crore in an integrated petrochemical complex at Dahej and developing the Rs 6,355 crore Gopalpur LNG terminal. The latter is expected to increase the company’s regasification capacity by nearly 18% to 32.5 million tonnes annually.
The CBG venture could also benefit from the government’s blending mandate for city gas distribution companies, which requires compressed biogas to be blended with transport compressed natural gas (CNG) and household piped natural gas. The blending obligation is scheduled to increase from 3% in FY27 to 5% from FY29.
However, the project’s execution will depend on the availability of a consistent supply of agricultural and organic waste across the locations where the plants are established. Unlike its LNG operations, which rely on imported cargoes, the proposed business will require a reliable domestic feedstock procurement and supply chain.
