Petronet LNG is diversifying its energy portfolio by investing ₹1,200 crore in compressed biogas (CBG) production. The company has signed a binding term sheet with Gruner Renewable Energy to establish a 50:50 joint venture that will develop 10 compressed biogas plants across India. The move marks Petronet LNG’s entry into large-scale domestic renewable gas production. It also comes amid growing concerns over the risks of relying on imported liquefied natural gas (LNG), as geopolitical tensions and supply disruptions continue to affect global energy markets.
Ten CBG Plants to Deliver 180 Tonnes per Day
Under the proposed joint venture, Petronet LNG and Gruner Renewable Energy will establish 10 CBG plants, each with a production capacity of 18 tonnes per day. The project will require an estimated investment of ₹1,200 crore. Once operational, the facilities will have a combined production capacity of 180 tonnes of CBG per day, equivalent to approximately 63,000 tonnes annually, assuming 350 operating days. However, the companies have yet to announce the plant locations and commissioning schedules. The project represents Petronet LNG’s first major move into large-scale domestic gas production and will provide an additional revenue stream beyond its core LNG business.
LNG Supply Disruptions Highlight Import Risks
Petronet LNG’s diversification plans come as geopolitical disruptions expose the vulnerabilities of import-dependent energy businesses. The company’s flagship Dahej LNG terminal recorded throughput of 192 trillion British thermal units during the April–June 2026 quarter, down from 207 trillion units in the corresponding period a year earlier. Restrictions and disruptions affecting shipping through the Strait of Hormuz also affected Qatari gas supplies. Meanwhile, rising spot LNG prices highlighted the potential impact of global supply shocks on energy costs and availability. Although the proposed CBG capacity remains small compared with India’s annual LNG imports of approximately 25.5 million tonnes, the project will help Petronet establish a presence in the domestic renewable gas market.
Major Investments Continue in LNG and Petrochemicals
Alongside its CBG plans, Petronet LNG continues to expand its conventional energy and petrochemical infrastructure. The company is investing ₹20,685 crore in an integrated petrochemical complex at Dahej. It is also developing the ₹6,355 crore Gopalpur LNG terminal, which is expected to increase its regasification capacity to 32.5 million tonnes per annum, representing an increase of nearly 18%. Together, these investments reflect Petronet’s strategy of expanding its core LNG infrastructure while exploring alternative sources of gas to diversify its business.
Government Mandates Support CBG Demand
Government policies could further support the growth of compressed biogas in India. City gas distribution companies must progressively blend CBG with transport compressed natural gas (CNG) and household piped natural gas. The blending obligation is scheduled to rise from 3% in FY2027 to 5% from FY2029. Consequently, these mandates could create additional demand for domestically produced CBG and encourage investment in renewable gas infrastructure.
Feedstock Supply Remains a Key Challenge
Despite the potential opportunities, Petronet LNG and Gruner Renewable Energy must address several operational challenges to make the project commercially successful. Unlike conventional LNG operations, which rely on imported cargoes, CBG production depends on securing a consistent supply of agricultural residues and organic waste. Therefore, the joint venture will need reliable feedstock procurement networks, efficient waste collection systems and effective plant operations across multiple locations. As reported by thehindubusinessline.com, if the partners manage these requirements effectively, the project could strengthen Petronet LNG’s domestic gas portfolio while supporting India’s renewable energy and energy-diversification goals.
