Natural Gas in India

Emergence of Natural Gas in India
Gail(India)Limited
16,bhikaji camaplace
R.K. Puram,NEW DELHI
Industry mentor
Lokesh Gairola Submitted by-
Chief Manager(Marketing) Ashish Tahiliani
GAIL Amity University
Noida
Project Report Approval Sheet
This is to certified that the project entitled, “ Emergence of Natural Gas in India” was
completed by Mr.Ashish Tahiliani under my guidance during the period w.e.f 13th May
2009 to 13th July 2009. The same is hereby approved.
Lokesh Gairola
Chief Manager (Marketing)
16, bhikaji cama place
R.k.Puram, New Delhi
ACKNOWLEDGEMENT
I express my sincere gratitude to my industry guide Mr. LOKESH GAIROLA, Chief

Manager (marketing), GAIL, for his able guidance, continuous support and cooperation
throughout my project, without which the present work would not have been possible.
I would also like to thank the entire team of GAIL, for the constant support and help in
the successful completion of my project.
Also, I am thankful to my faculty guide Mr. VIVEK KUMAR of my institute, for his
continued guidance and invaluable encouragement.
Ashish Tahiliani
Abstract
Gas occupies about 9% of the total energy basket of the country. However, the scenario is
fast changing in the country, largely because of the expected increase in the availability
of natural gas in the country.
Presently, fertilizers and power sectors continue to be the major consumers of natural gas
at 33% and 45% respectively. PMO has directed that the fertilizers sector should get the
highest priority in allocation of natural gas. It has also been directed that the power sector
should be encouraged to rely more on natural gas for new capacities.
At present, there is an acute shortage of natural gas in the country. As against the current
estimated demand of about 180 MMSCMD, the availability is around 120 MMSCMD.
Presently gas supply is being made from the domestic fields of ONGC, OIL, Private JV
operators and from the import of LNG.
Government of India has adopted a multi-pronged strategy to augment gas supplies and
bridge the gap between supply and demand for the domestic market these cover:-
1. Intensification of domestic E&P activities.

2. Exploitation of unconventional sources like Coal Bed Methane(CBM)
3. Underground coal gasification
4. Implementation of Natural Gas Hydrates Programme (NGHP) for evaluation of
hydrate resources and their possible commercial exploitation
5. LNG Imports
6. Gas sourcing through transnational gas pipelines.
Demand-Supply Gap for Natural Gas
The gap in demand and supply of natural gas, under normal scenario, for a year as a
percentage of total supply ranges from 64% to 158% of total supply for that year
reflecting the scope of imports in the country. The shortfall of domestic supplies will
primarily be met with LNG imports. The total LNG imports in the country are projected
to increase from 30.45 mmscmd in 2007 to 83.12 mmscmd in 2012. The import of LNG
as percentage of total demand in the country ranges from 17% in 2008 to around 30% in
2012. Thus despite imports of LNG India will still face short supply of gas to meet its
demand.
The increased availability of natural gas will have a positive impact on the economic
growth of the country. Natural gas is a relatively clean fuel and has advantages over other
fuels. Additionally availability of this resource should be used in a judicious manner. The
necessary infrastructure for transportation of gas from production centers to different
consumption centers is also being put in place by different agencies. There is a need to
closely monitor the firming up of demand estimates by various sectors so that the
available gas is used as per the production plan in a timely manner.
Table of content
Chapter Content Page no.

Abstract
1 About the company
• Joint ventures and Subsidiaries
• Future plans of Gail w.r.t Natural Gas
2 Reforms of Natural Gas Industry
Objective of the project
3 Introduction of the project
• India’s energy mix
• Introduction of Natural gas
• Environmental scanning of natural gas
sector
• Natural gas outlook
4 Research Methodology
5 Data analysis and Interpretation
• Findings
6 Recommendation and conclusion
Scope of Further study
7 Annexure
• Questionnaire
• Personal interview
• Conversion table
• Projections by different agencies
8 Reference
ABOUT THE COMPANY
GAIL (India) Ltd.is one of the outstanding public enterprises in the country today. It is
one of the “NAVRATNA ENTERPRISES” and ranks among the top five companies in
India. It is India’s flagship natural gas company, integrated all aspects of the natural gas
value chain (including Exploration and Production, Processing, Transmission,
Distribution and Marketing) and its related services. In a rapidly changing scenario,
GAIL (India) is spearheading the move to a new era of clean fuel industrialization,
creating a quadrilateral of green energy corridors that connect major consumption centers
in India with major gas fields, LNG terminals and other cross border gas sourcing points.
GAIL is Also expanding its business ton become a player in International market
GAIL has completed nearly two and half decades of a eventful journey. Starting with a
natural gas transmission company, it is today an integrated energy company along the
natural gas value chain with global footprints. having started as a gas transmission
company during the late eighties, it grew organically over the years by building a large
network of natural gas trunk pipelines covering a length of around 7000 Km. Today ,
Gail has interests in the business of natural gas, LPG, liquid hydrocarbons and
petrochemicals, the latter being value added products. The company has also entered in
telecom sector by leasing bandwidth available through the OFC which is laid along the
gas pipelines for their operations and maintenance. GAIL has also diversified into
exploration and production, city gas distribution and is steadily developing an overseas
presence etc.GAIL is one of the leading public enterprises with a consistently excellent
financial track record. Turnover during the last ten years has shown a compounded
annual growth rate of 13 percent. The company recorded a turnover of rs.180.08 billion
and a profit after tax of Rs.26.01 billion in FY 2007-08.The Company has also received
authorization from the Ministry of Petroleum and Natural gas to lay 5 new pipelines and
in addition, augmentation of 3 existing pipelines is also being taken up. This will lead to
doubling of pipelines length and transmission capacity in the next 4 to 5 years
VISION- Be a leading company in natural gas and beyond, with global focus, committed
to customer care, value creation for all stakeholders and environmental responsibility.
MISSION- Accelerating and optimizing the effective and economic use of natural gas
and its fractions to the benefit of national economy.
MAJOR BUSINESS SEGMENTS
• Natural gas
• Petrochemicals
• Exploration and production
• LPG and other Liquid hydrocarbons
• Telecommunication
HISTORY OF THE ORGANISATION
GAIL (India)Ltd.(erstwhile Gas Authority of India Ltd),India’s principal gas

transmission and marketing company, was set up by the Government Of India in August
1984 to create gas sector infrastructure for sustained development of the natural gas
sector in the country.
The 2800 Kms Hazira-Vijaipur (HVJ) pipeline became operational in 1991.During 1991-
1993, three LPG plants were constructed and some regional pipelines acquired, enabling
GAIL to begin its regional gas distribution in various parts of India.
GAIL began its city gas distribution in Delhi in 1997 by setting up nine CNG stations,
catering to the city’s vast public transport fleet.
In 1999, GAIL set up northern India’s only petrochemical plant in Pata.
GAIL became the first infrastructural provider category II Licensee and signed the
country’s first service level agreement for leasing bandwidth in the Delhi-Vijaipur in
2001,through its telecom business GAILTEL.In 2001,GAIL commissioned worlds
longest and India first cross country LPG Transmission Pipeline from Jamnagar to Loni
GAIL today has reached new milestone with its strategic diversification into
Petrochemicals, Telecom and Liquid hydrocarbons besides gas infrastructure. The
company has also extended its presence in Power, Liquefied Natural Gas re-gasification,
city gas distribution and exploration & Production through equity and joint ventures
participations. Incorporating the new found energy into its corporate identity, Gas
Authority of India was renamed GAIL (India) Limited on November 22, 2002.
GROWTH
1990-91
 2800Kms Hazira-Vijaipur Jagdishpur (HVJ) pipeline becomes operational in

1991.
 LPG phase-I plant at Vijaipur commissioned in February 1991.
1991-92
 Phase-2 at LPG Vijaipur plant commissioned in Feb 1992.
1992-93
 LPG project at Vaghodia commissioned in Feb 1003
1994-95
 Joint venture Agreement signed with British Gas on December 6,

1994.Mahanagar Gas Limited Incorporated to implement Bombay City Gas
Distribution project.
1997-98
 Government of India grants Navratna status to Gail, herby entrusting greater

autonomy to Gail after restructuring of the Board.
 Gas processing units (GPU), offsite utilities of the petrochemical plant at Pata,
commissioned.
1999-00
 GAIL participates in NELP bidding by submitting offer for 7 blocks in

association with ONGC & IOC and Russian company Gazprom.Government of
India approved award of 2 blocks to GAIL, One with ONGC in Orissa offshore
and another with Gazprom in Bengal Offshore.
 LPG plant at Pata with a designed capacity of 2.58 lacs TPA of LPG
commissioned for commercial production in March 2000.
2000-01
 GAIL conceptualizes a National Gas Grid to connect the supply and demand
centres in the country with high pressure cross country pipelines networks.
 The gas processing complex, Gandhar begins production in March 2001.The

process LPG, 0.43 Lacs MT of Pentane and SBP solvent.
 Jamnagar-Loni LPG Pipeline project, the worlds longest and India’s first cross
country LPG 1296 Km long pipeline, which passes through
Gujrat,Rajasthan,Haryana and Delhi is completed. The capacity of the pipelines in
its first phase is 1.7 million TPA, to be upgraded to 2.5 million TPA in the second
phase.
2001-02
 GAIL picks up 12% equity in GSEG’s 156 MW power project in Gujarat as a

strategic investment.
 Marketing functions is restructured and decentralize at zonal levels.
 GAILTEL phase-I commissioned, creating an OFC based DWDM network

connecting Delhi-Mumbai, Delhi-Jaipur, Delhi-Ahmmdabad, Delhi-Vijaipur,
Meerat-Agra.
2003-04
 GAIL has an initial success in the form of significant gas find in the block A-1 in
Myanmar and discovery of oil and gas in the Cambay block.
 GAIL successfully secures participation in 2 retail gas companies in Egypt,

Fayum Gas Company and Shell CNG.
 Platts declares GAIL as the first among Global Gas Utilities based on return on
investment capital (ROIC) in its worldwide survey of Top 250 energy companies
in 2004.
 Vizag – Secundrabad LPG pipeline. the 580 km pipeline with the maximum
throughput of 1.16 MMPTPA completed in June 2003
 Bhagyanagar Gas Limited, a joint venture of GAIL and HPCL, incorporated in

August 2003,in the field of distribution and marketing of auto LPG,CNG for
vehicles and retailing of natural gas in the cities of Andhra Pradesh.
 Phase I and II of 8000 km network GAILTEL projects connecting Delhi, Mumbai

and 71 other cities, completed. This network provides a national communication
backbone.
2004-05
 Incorporation of GAIL Global Singapore PVT.LTD
 Acquisition of 15 % equity stake in Natural Gas, Egypt.
 Agreement signed for acquisition of 9 % equity stake in China Gas Holding LTD,
a joint venture for city gas projects in 42 cities of China.
 Tripura Natural gas Co.Ltd, a joint venture for city gas project in Tripura,
incorporated
 UP central gas Ltd, a joint venture for city gas project with BPCL in Kanpur,
incorporated
 De-bottlenecking of LLDPE swing unit from 150000 MT to 210000 MT at GAIL

Pata.
 Gas management system commissioned for HVJ, DVPL and SGPL.
 Commissioning of South Gujarat pipeline network.
 Commissioning of Vizag-Secundrabad LPG pipeline.
2005-06
 GAIL, ilex Australia, Videocon, HPCL and BPCL consortium awarded Blocks
no 56 in Oman.
 GAIL was ranked 11th among top 15 of the worlds largest listed gas utilities firms
in the oil and gas industry ,in terms of market capitalization ,for the year 2005.
 GAIL gets Golden Icon award for e-governance
 Inauguration of the National gas management centre (NGMC) of GAIL at

NOIDA.
 GAIL bagged two awards for excellence in cost management from the Institute of
Cost and Works Accounts of India (ICWAI).
2006-07
 Mechanical completion of new HDPE (High Density Polyethylene) plant with a

capacity of 100,000 TPA at Petrochemical complex at PATA.
 Commissioning of Dahaj-Panvel pipeline
 Brahmaputra cracker and polymer Limited-Joint venture company led by GAIL,

formed for implementing Assam gas cracker projects
 GAIL acquires stake in A7 Myanmar block
 GAIL’s Vijaipur- Kota pipeline commissioned
 GAIL’s Kailaras- Malanpur pipeline commissioned
 GAIL’s consortium wins 3 CBM blocks in #rd round of bidding
 GAIL HPCL joint venture-Avantika gas limited incorporated
 GAIL ONGC ink gas supply agreement

 GAIL brings India’s first spot LNG cargo at Dahej
GAIL TODAY
GAIL (India) Limited, is India’s flagship natural gas company, integrating all aspects of
the natural gas value chain (including Exploration and Production, Processing,
Transmission, Distribution and Marketing) and its related services. Gas transmission and
distribution forms the bulk of GAIL’s business today followed by gas processing for LPG
production and production of petrochemicals.
DIVERSIFICATION
Today GAIL has expanded into Gas processing, Petrochemicals, Liquefied Petroleum
Gas Transmission and Telecommunications. The company has also extended its presence
in power, Liquefied natural gas re-gasification, city gas distribution and exploration and
production through equity and joint ventures participations. GAIL (India) Ltd has the
largest high pressure pipeline in India.
HIGHLIGHTS (2006-2007)
• Construction of 600 Kms of pipeline
• Expanding its petrochemical capacity at Pata plant from 310000 to 410000
• In consortium with several national and international companies GAIL

was awarded 15 blocks under NELP
• Gailtel achieved the profit of 0.97cr

HIGHLIGHTS (2007-2008)
• Govt awarded marketing rights of PMT gas to GAIL as Govt of India nominee
• Transmission of gas to Godavari from Krishna as done by the agreement between

GAIL and RLTIL
• MOU with Reliance for joint cooperation in petrochemicals
• Expansion of PATA plant
• Joint venture with China(China gas global energy)
• MOU with ITERAoil and gas company of Russia
• Joint venture for city gas projects in Rajasthan(GAIL AND HPLL)
• City gas distribution in West Bengal(GAIL and Indian oil)

SUBSIDIARIES & JOINTVENTURES of GAIL
Gail(India) Ltd has been the pioneer for City Gas Projects in India. With natural gas
emerging as the fuel of choice in the country, Gail (India) Ltd believes that the next
decade will belong to the city gas. Gail (India) Ltd was the first Company to introduce
City Gas Projects in India for supplies to households, commercial user and for the
transport sector by forming Joint Venture Companies.
Subsidiaries GAIL Gas Limited
Gail (India) Ltd has formed a wholly owned subsidiary named ‘GAIL Gas Limited’ for
implementing City Gas Projects and CNG corridor in the country. The subsidiary
company will act as a vehicle for bidding for laying of pipeline infrastructure in the
country.
GAIL Global (Singapore) Pte. Limited
Gail (India) Ltd has a wholly owned subsidiary, namely, GAIL Global (Singapore) Pte
Ltd. to manage investments abroad. Gail (India) Ltd is looking for further business
opportunities through this subsidiary company.
Brahmaputra Cracker and Polymer Limited
Gail (India) Ltd has 70% equity share with Oil India Limited (OIL), Numaligarh Refinery
Limited (NRL), Govt. of Assam, each having 10% equity share. The authorized capital of
the company is Rs. 1,200 Crores. A Feedstock Supply Agreement has been signed
between Brahmaputra Cracker and Polymer Limited (BCPL), and all the three suppliers
viz., Oil and Natural Gas Company Limited, Oil India Limited and Numaligarh Refinery
Limited. Financial closure for the project is likely to be completed during the year 2008-
09.
Joint Ventures
Aavantika Gas Limited (AGL):
AGL is a Joint Venture of Gail (India) Ltd and Hindustan Petroleum Corporation Limited
(HPCL) for implementation of City Gas Projects in the cities of Madhya Pradesh. AGL
has started project implementation activities in the city of Indore. Gail (India) Ltd has
22.5% stake in the Company along with HPCL as equal partner.
Bhagyanagar Gas Limited (BGL):
BGL is currently operating three Auto LPG stations in Hyderabad and one Auto LPG
station in Tirupathi. It is currently operating six CNG stations in Vijayawada andthree
CNG stations in Hyderabad. Gail (India) Ltd has 22.5% stake in the company along with
HPCL as equal partner.
Central U.P. Gas Limited (CUGL):
CUGL is currently operating five CNG stations in Kanpur, one CNG station in Bareily
and one CNG station in Kanpur is under commissioning. CUGL is building MDPE
network for supply of PNG to domestic, commercial and industrial sectors in the city of
Kanpur. Gail (India) Ltd has 22.5% stake in the company along with BPCL as equal
partner.
Green Gas Limited (GGL):
GGL is currently operating four CNG stations in Lucknow and three CNG stations in
Agra. GGL will also take up project implementation in other cities of Western UP on the
basis of gas availability and project viability. Gail (India) Ltd has 22.5% stake in the
company along with IOC as equal partner.
Indraprastha Gas Limited (IGL):
IGL is supplying piped gas to around 1 Lac domestic, 276 commercial, 16 small
industrial consumers and CNG to over 1.35 Lacs vehicles through 153 CNG stations.
IGL is catering to world’s largest CNG bus fleet of over 11,000 buses in Delhi. Gail
(India) Ltd has 22.5% stake in the company along with BPCL as equal partner.
Mahanagar Gas Limited (MGL):
MGL has set up 128 CNG stations catering to over 1.85 Lacs vehicles spread over
Mumbai, Thane, Mira- Bhayandar and Navi-Mumbai areas besides supplying PNG to
over 3.40 Lacs domestic, 907 commercial and 36 small industrial consumers. Gail (India)
Ltd has 49.75% stake in the company along with British Gas as equal partner.
Maharashtra Natural Gas Limited (MNGL):
MNGL is a Joint Venture of Gail (India) Ltd and Bharat Petroleum Corporation Limited
(BPCL) for implementation of City Gas Projects in Pune city. MNGL is developing
necessary infrastructure for supply of CNG and PNG in the city. Gail (India) Ltd has
22.5% stake in the company along with BPCL as equal partner.
Petronet LNG Limited (PLL):
PLL was formed for setting up of LNG import and regasification facilities. PLL has a
long term LNG supply contract with Ras Gas, Qatar for import of 7.5 MMTPA. PLL
Dahej terminal is being expanded to 10 MMTPA capacity. Gail (India) Ltd has 12.50%
stake in the company along with BPCL, IOC and ONGC as equal partners.
Ratnagiri Gas and Power Private Limited (RGPPL):
RGPPL is a Joint Venture Company between Gail (India) Ltd, NTPC, Financial
Institutions and MSEB. Gail (India) Ltd has 28.33% stake in the company along with
NTPC as equal partner. The capacity of the Ratnagiri Gas & Power Station is 2,150 MW.
Gail (India) Ltd has made an investment of Rs. 500 Crores and has approved additional
equity of Rs. 475 Crores to RGPPL, out of the Rs. 475
Crores, an amount of Rs. 92.90 Crores has been paid during the month of May, 2008.
Tripura Natural Gas Company Limited (TNGCL):
TNGCL is presently supplying gas to 6600 domestic, 104 commercial, 21 industrial

consumers and has set up one CNG station in Agartala city. Gail (India) Ltd has 29%
stake in the company. Gail (India) Ltd has approved formation of JV for City Gas
Projects in Vadodara with Vadodara Mahanagar Seva Sadan (VMSS) with 26 percent
equity, while VMSS will have 24 per cent equity. The balance 50 per cent equity will be
held by strategic investors and public. A JV agreement has also been signed with HPCL
for city gas projects in Rajasthan.
Future Plans of Gail w.r.t Natural Gas
Physical Growth Strategy and Way Forward:
1. Domestic Gas Sourcing & Marketing
Strategy
• Target transmission of 246 MMSCMD and marketing of 158 MMSCMD
gas out of total estimated gas availability of 290 MMSCMD by 2011-12
• Develop new markets
• Offer flexibility in contract terms
• Optimal utilization of network through swapping/sharing
• Segregation of rich and lean gas on HVJ/DVPL for processing plants
• Rationalization of transmission tariff for spur-lines
Action Plan
• Aggressive tie-up with producers/suppliers and linkage with upcoming
sources
Gas Transmission Gas Marketing Timeline
(MMSCMD) (MMSCMD)
83 70 2007-08
129 83 2008-09
182 112 2009-10
205 126 2010-11
246 158 2011-12
• Advance action on finalization of GSAs and GTAs for new pipelines

• Leverage transmission capability to secure more gas from new gas finds
• Opportunistically operate pipelines on common carrier principle to bring
additional revenue in terms of transmission tariff
• Step up efforts to source directly from international markets; utilize
connectivity between HVJ and Shell Hazira terminal
• Efforts to retain existing customers and ensure that future customers choose
GAIL over competitors.
2. Gas Transmission
Strategy
• Proactively expand pipeline infrastructure from 6100 km to 11000 km by
2011-12 to meet the transmission target of 246 MMSCMD.
• Leverage existing capacities in trunk lines & regional networks; focus on
optimization of pipeline capacity.
• Reduce project cost and execution time.
• Create spurlines for prospective City Gas Distribution projects
Action Plan
• Execution of Seven Pipeline projects by 2011-12 :
Pipeline Timeline
1 Capacity augmentation of DVPL/GREP
I Phase-1: New Compressor Station in DVPL & Loop-line in 2009
GREP
Ii Phase-II: Loopline in DVPL& Compressor station in GREP 2011
2 Chainsa-Gurgaon-Hissar P/L
I Phase –I : up to Jhajjar 2009
Ii Phase – II: up to Hissar 2011
3 Dadri-Bawana-Nangal P/L
I Phase –I : up to Bawana 2009
Ii Phase – II: up to Nangal 2011
4 Dabhol-Bangalore P/L 2011
5 Kochi-Mangalore-Bangalore P/L 2011
6 Jagdishpur-Haldia P/L 2011
7 Kochi-Kayamkulam P/L 2012
• Prepare a paper on “Corridor of rich gas and lean gas pipelines separately”
for facilitating operations of Gas Processing Units & Petrochemical Plant.
• Strengthen project management skills
• Since future pipeline projects will be allotted based on competitive bidding
procedure by regulator, ensure competitiveness in terms of cost efficiency,
execution timelines etc.
3. City Gas
Strategy
• Aggressively pursue City Gas opportunities in Domestic cities
• Immediate priority of rolling out city gas in more cities :
– 20 cities by 2008-09
– 54 cities by 2010-11
– 130 cities by 2012-13
(GAIL has applied to MoP&NG for authorization for City Gas Distribution
in 230 cities contiguous to existing/proposed pipelines in various states of
India)
• Develop CNG corridors along highways contiguous to our Networks
Action Plan
• Allocate gas for city gas projects on priority out of the new secured sources
(ONGC, RIL, RLNG, etc.)
• Form JVs with OMCs and various gas producers to exploit circumstantial
advantages.
• Explore possibility of city gas projects independently or through wholly
owned subsidiaries.
• Prioritize network to be developed for the industry clusters
• Detailed report on development of one CNG corridor for transport sector on
pilot basis
4. E&P
Strategy
• Target to be self-sustainable by 2011-12
• Secure gas sources through E&P route to strengthen mid stream &
downstream business
• Participation as sole / joint operator in Domestic E&P / CBM Bidding
rounds
• Balanced portfolio of exploration & development assets.
• Pursue international E&P opportunities as non-operator
• Acquisition of small E&P company in India or abroad
Action Plan
• Commercialize production from 5 blocks by 2011-12
• Identify farm-in and farm-out opportunities for balancing the portfolio
• Develop and strengthen E&P capability and resources for operatorship -
ensure requisite manpower strength by time bound recruitment plan
• Balanced approach in E&P - participation as major partner / operator in
Domestic E&P Bidding rounds
• Examine the approach taken by other E&P companies.
Reforms of Natural Gas Industry
1.1 Gas market reform
A central issue for gas market reform in many economies has been how to create
more competitive and flexible markets in the presence of natural monopolies in
transmission and distribution. Pipelines, the only economic option for transporting gas
across land, involve large fixed costs and low marginal costs of operation such that a
given level of demand can usually be met at lower cost by using one pipeline intensively
rather than building a second pipeline. Even when a market grows beyond the initial
design capacity of a pipeline, capacity can usually be expanded by adding compressors at
considerably lower cost than building a new pipeline.
One of the purposes of gas market reform is to separate the market for the gas
commodity from the market for gas transport services. In the traditional model for gas
supply in many economies, including India, consumers have only been able to purchase
delivered gas from a single pipeline owner at a bundled price incorporating the cost of the
gas plus the cost of transporting it. Unbundling and open access to pipelines creates the
opportunity for gas consumers and producers to negotiate directly for the sale of gas, and
then separately arrange for its transport.
In recent years, the Indian Government has made significant progress in

establishing a regulatory framework for pipeline access and pricing, seeking to promote
downstream competition and increased public and private investment in natural gas
pipeline infrastructure. In early 2006, the Indian Parliament passed the Petroleum and
Natural Gas Regulatory Board Act, which envisaged setting up an independent
regulator to monitor post production activities.
The Petroleum and Natural Gas Regulatory Board, which is currently being
established, will regulate:-
• Building, laying, operating and expanding natural gas pipelines.

• City or local gas distribution networks, and
• Access, tariffs and technical standards.
The objective of the board is:-

• to protect consumer interests by fostering fair trade and competition among
entities engaged in specified activities relating to natural gas, and
• to ensure uninterrupted and adequate supply of natural gas in all parts of the
country and to promote competitive markets in India.
To underpin the Petroleum and Natural Gas Regulatory Board Act, the
Government has formulated the Gas Pipeline Policy for the development of natural
gas pipelines and city or local gas distribution networks, which came into effect at the
end of 2006. The objective of the policy is:-
• to promote public and private investment in natural gas pipelines and city or local
gas distribution networks,
• to facilitate open access for all players to the pipeline network on a
nondiscriminatory basis,
• to encourage competition among entities, and
• to protect consumer interests in terms of gas availability and reasonable gas
transport tariffs.
A Gas Advisory Board will also be set up to promote and develop the gas
pipeline network in India.
 Currently, open access to the transmission network is allowed on a limited scale.

For example, Petronet LNG joint venture partners use Hazira–Vijaipur–Jagdishpur and
Dahej–Vijaipur networks to sell regasified LNG. New regulations are expected to permit
open access on a larger scale and in a transparent manner, thus enabling private producers
and LNG terminal operators to sell gas directly to their customers. State governments are
expected to play a key role in facilitating timely completion and operation of pipelines
and city or local natural gas distribution networks by ensuring statutory and other
clearances are given without delay.
 As the natural gas market in India matures, the policy envisages the unbundling of
gas transmission and marketing activities to avoid conflicts of interest and to
ensure that pipeline ownership does not provide competitive advantage to any gas
seller, and all players have open access to the gas grid on a nondiscriminatory
basis. Importantly, the policy permits 100 per cent foreign direct investment in
laying natural gas pipelines under the automatic approval route, seeking to boost
investment in natural gas infrastructure development and to supplement domestic
sources of finance.
 Some of the contentious issues raised by the industry in relation to the new natural
gas regulations concern the power of the board to regulate contract carriers, where
pipelines are laid exclusively for consumers, and the decision on the pipeline is
made between the network operator and a specific consumer. The board also has
the power to determine a period of exclusivity for city or local gas distribution
networks, a power that is supported by network operators and contested by
prospective new entrants (ICRA 2006).
Development of a national gas pipeline network will be a key driver of growth in

India’s natural gas market. Passage of the Petroleum and Natural Gas Regulatory
Board Act and release of the associated Gas Pipeline Policy is a significant step forward
in creating a robust regulatory framework for downstream natural gas activities. The
appointment of members of the proposed regulatory board and finalisation of further
policy directives governing the gas market are expected to trigger much needed
investment in the expansion of gas transmission and distribution infrastructure. The
Indian Government estimates that investment by public and private entities could reach
almost 400 billion Indian rupees (around US$9 billion) over the five years to 2011-12.
Gas transmission pipelines account for more than half of the expected investment,
followed by LNG terminals and city gas distribution networks at nearly one quarter
(MoPNG 2006a). However, clarity on unresolved or contentious issues is critical for
investment to start flowing into the gas infrastructure sector and for a competitive gas
market to emerge. If investment in coming years is less than optimal, it will have a
dampening effect on gas demand.
Recent policy initiatives
In recognition of the key role of electricity in driving rapid economic growth and
poverty alleviation, India has set the target of providing access to electricity to all
households by 2012 and increasing availability of electricity to more than 1000 kilowatt
hours per person by 2012. The latter target would require an estimated capacity addition
of more than 100,000 megawatts by 2012. The government has identified further
electricity sector reform that includes:-
• promoting competition in interstate transmission,

• setting up an independent government authority to ensure nondiscriminatory grid
access for competing generators,
• launching a program for capacity additions,
• reducing transmission and distribution losses, and
• attracting private investment.
To meet the above objectives, a new policy and regulatory framework is being put in
place, The Electricity (Amendment) Act 2007.
The Electricity (Amendment) Act 2007 provides an enabling environment for

accelerated and more efficient development of the power sector, seeking to encourage
competition with appropriate regulatory intervention. There is no licensing requirement
for electricity generation and captive generation has been freed from all controls under
the Act.
 The national electricity policy sets out guidelines for the accelerated development
of the power sector, providing supply of electricity to all areas and protecting the
interests of consumers and other stakeholders, keeping in view the availability of
energy resources, available technologies, economics of electricity generation, and
energy security issues.
 Other key initiatives in the sector include the rural electrification policy, and
Mega power projects (thermal generation projects of at least 700 megawatt
capacity and hydropower plants of at least 350 megawatt capacity that supply
electricity to more than one state).
Objective of the study/project
1)To understand the consumption pattern of natural gas in India
2)To analysis the growing need of the natural gas in India.
3)To analysis factors constraining the development of gas market
4)To estimate the future demand for natural gas in India.

India’s Energy Mix
India, with a population base of over 1.1 billion, is the fifth largest energy consumer
in the world. With consumption at 450 Mtoe of primary energy in 2007 India accounts
for 3.7 percent of the total world primary energy consumption. The per capita energy
consumption of less than 2.0 Mtoe per capita, however, is at the lower end of the
spectrum, compared to other countries such as China and USA. Historically, the
country’s energy consumption trend has shown a compounded annual growth rate
(CAGR) of 6 percent.
In order to sustain such high projected economic growth rates India is faced with the
challenge of not only securing long term energy supplies at reasonable costs but also
ensuring that such energy sources are clean, convenient and reliable. Today, India uses
different forms of energy sources to fuel its economy. These include coal, oil, natural gas,
hydel and nuclear besides other renewable energy sources such as wind, solar, biomass
etc. Coal contributes a major chunk, about 55 percent, to India’s primary energy basket
with oil and natural gas contributing 30 percent and 9 percent respectively.
The share of natural gas at 8 percent, as against the world average of 24 percent, speaks
of the potential for development of natural gas market in India. The Government, as
stated in the Hydrocarbon Vision 2025, also projects the share of natural gas in India’s
energy basket to grow from the current 8 percent to 15 percent by the end of the Tenth
Plan period (2006-07) and to 20 percent by 2024-25.
The energy consumption matrix of India is dominated by fossil fuels viz. coal & lignite,
Oil& Natural gas. Total commercial energy consumption till 2007-08 has grown at
CAGR of6 per cent over 1980-81 while natural gas consumption has grown at a CAGR
of 13 percent over the same period.
Sector wise cosumption of Natural Gas in India.
Gas demand in India continues to be influenced by the cost

economics vis-à-vis alternative fuels pertaining to each of
the end use sectors, primarily power and fertilizer, as also
the dynamics of these sectors. The natural gas consumption
in India in 2007 was as follows:-
Various agencies have made assessments in the past
regarding natural gas demand and supply. The same is
given in the appendix.
Introduction of Natural Gas
Natural gas is clean fossil fuel with many uses. Its key constituent is methane-the
simplest form of hydrocarbon molecule, comprising one carbon atom attached to form a
hydrogen atom-which combines with oxygen when burnt to form carbon dioxide and
water. Methane is a colorless, odorless gas which usually burns with a blue flame, but if
there is not enough oxygen present for complete combustion the flame turns yellow
indicating the presence of soot (pure carbon) and the poisonous by-product, carbon
monoxide. The characteristic smell of natural gas as sold to the consumer is added, either
by the pipeline transmission company or by the local distribution company to make it
easier to identify leaks
Pipeline gas is not a uniform product since the heat released by burning (its calorific
value) depends on the proportions of its other constituents mainly carbon dioxide,
nitrogen and hydrogen which depend on where the gas comes from. Increase amounts of
carbon dioxide and nitrogen that dilute natural gas reduce its constraint for entry to gas
pipeline networks and producers must be able to supply natural gas which meets the
relatively narrow quality specifications laid down by pipeline operators.
Natural Gas come Natural gas is a combustible mixture of hydrocarbon gases. While
natural gas is formed primarily of methane, it can also include ethane, propane, butane
and pentane. The composition of natural gas can vary widely, but below is a chart
outlining the typical makeup of natural gas before it is refined.
Typical Composition of Natural Gas
Methane CH4 70-90%

Ethane C2H6 0-20%
Propane C3H8
Butane C4H10
Carbon Dioxide CO2 0-8%
Oxygen O2 0-0.2%
Nitrogen N2 0-5%
Hydrogen sulphide H2S 0-5%
Rare gases A, He, Ne, Xe Trace
In its purest form, such as the natural gas that is delivered to your home, it is almost pure
methane. Methane is a molecule made up of one carbon atom and four hydrogen atoms,
and is referred to as CH4.
Natural Gas in 4 basic forms:
• Liquified Natural Gas, LNG - Natural Gas which has been liquefied at -160
Natural Gas is liquefied to facilitate transportation in cryogenic tankers across sea
• Regasified Liquefied Natural Gas, RLNG -
• Compressed Natural gas, CNG - Natural Gas compressed to a pressure of 200-250
kg/cm2 used as fuel for transportation, CNG decreases vehicular pollution
• Piped Natural gas, PNG - Natural Gas distributed through a pipeline network that
has safety valves to maintain the pressure assuring safe, uninterrupted supply to
the domestic sector
Sector-wise use of natural gas
Sector Natural Gas is used

As fuel for base load power plants
Generation of electricity
In combined cycle/co-generation
by utilities
power plants
As feed stock in the production of
Fertilizer Industry
ammonia and urea
As an under boiler fuel for raising
steam
Industrial
As fuel in furnaces and heating
applications
Domestic and For heating of spaces and water
commercial For cooking
Automotive As a non-polluting fuel
As the raw material from which a
Petrochemicals variety of chemical products
e.g. methanol, are derived
Environmental Scanning of Natural Gas Sector
The natural gas market in India is passing through a transition phase where new paradigm
is replacing the existing framework of consumer markets, suppliers, govt. policies etc.
The drivers of change can be traced to the emerging environment as follows:
• Political Environment – The Govt. is under an obligation to provide adequate

resources to its citizen for meeting their energy requirements. As per Eleventh
Five Year Plan over half of the country’s population does not have access to
electricity or any other form of commercial energy. The escalating oil prices have
further made it difficult for the Govt. to maintain its subsidized fuel policy.
Therefore it needs to find out alternative, economically viable fuels. Natural Gas
emerges as the front runner among all other alternative sources like hydro, wind,
solar and nuclear energy.
• Economic Environment – The development of Indian economy requires
sufficient supply of energy resources. In order to meet the accelerating pace of
economic growth, diversification of energy resources is inevitable as oil imports
are not dependable with escalating crude prices. The energy supply basket must
contain a proper mix of conventional and non conventional resources with a
balanced approach to imports and domestic production.
Besides, prices of alternative fuels also influence the consumption pattern of
energy resources. Natural Gas is comparatively very cost effective for end users
like power, fertilizer etc. resulting into higher demand. Such concerns resulted
into focus being shift to development of alternative fuel sources like natural gas,
liquefied natural gas (LNG), coal bed methane, gas hydrates etc.
• Social Environment – The increasing awareness among people for environment
preservation influenced their fuel consumption habits. Public Interest Litigations
(PIL) / media sensitize people towards preservation of nature’s heritage for the
benefit of future generations and highlighted the degradation of environment due
to various kinds of pollution.
• Technological Environment – New Exploration and Licensing Policy (NELP)

initiated the private sector participation in oil and gas sector. The exploration and
production activities stepped up with use of new technologies like high resolution
3 D seismic survey etc. Private players showed comparatively higher exploration
efficiency and reported new oil and gas finds like RIL’s KG Basin find which
encouraged all the participants in oil and gas market. This has made possible the
utilization of new improved / latest technologies in the country.
Natural Gas - Outlook
Most agencies have projected India’s demand of natural gas to grow at a rate
higher than other fuels such as oil and coal. The future demand for natural gas in India
will be driven mainly by two factors:
� the need for new sources of energy to fuel economic growth and improve living
conditions; and
� the desire to reduce the consumption of coal and liquid fuels and thus the level of
pollution.
These drivers are, however, subject to a number of constraints in determining the actual
level of gas demand: the price of gas and its competitiveness vis-à-vis other fuels and the
rate at which the downstream market is developed in both power and non-power sectors.
Many uncertainties will affect the future gas demand level, particularly with respect to
the cost of supply and India’s ability to create an integrated national transportation and
distribution network. Competitiveness of natural gas against coal in power generation
will also be a key determinant of gas-demand growth.
India’s demand projections have been made at different points in time using different
assumptions and for different periods. summarises the projections made by different
agencies for the same milestone years over respective forecast period by adopting the
process of interpolation and extrapolation.
INDIAN PLANNING COMMISSION
For arriving at the future demand for natural gas, sectorwise analysis has been carried out
as under:
Power Sector Analysis
The power sector would continue to be one of the major consumers for natural gas. The
Ministry of Power has set a target of 70,000 MW generation for the 5 year period ending
2012. The current thermal power generation is about 90,800 MW, of which 12 percent
(10,900 MW) is gas based. The gas-based power plants, which are gaining everyone’s
attention in the power sector, would definitely be the main source of energy in the future.
Gas based power plants have a capacity of 1,889.2 MW and the requirement of gas for
the same is likely to be 7.5 MMSCMD.
Department of Power has made a projection of additional 33,655 MW of gas based power
projects, which may come up by 2012. On an optimistic note, 40 percent of these plants
have been assumed to come up by 2012. This would translate into roughly 12,700 MW of
power generation, requiring around 50.82 MMSCMD gas.
The present requirement of gas for the existing gas-based power plants is 68.19
MMSCMD. Adding gas requirement of 7.50 MMSCMD and 50.82 MMSCMD, as
explained in the above Para, the total gas requirement by the end of 2011-12 is likely to
be 126.57 MMSCMD. Assuming that the gas requirement increases in the same
proportion every year, the projected gas demand for the power sector by 2011-12 would
be as under:
Fertilizer Sector Analysis:
It has been well established that natural gas is the most cost effective fuel vis-à-vis other
liquid fuels for fertilizer plants. During the year 2004-05, gas based fertilizer (urea)
production accounted for 66 percent of the total fertilizer production. Naphtha and
FO/LSHS based production accounts for the balance 34 percent. Requirement of gas for
fertilizer sector is expected to increase in the years to come, not only for meeting the
current shortfall being faced by the existing gas based urea units but also on account of:-
conversion of Naphtha and FO/LSHS based units to NG/LNG,
de-bottlenecking of existing urea units,
setting up of new and expansion of existing urea units and
revival of closed urea units of Hindustan Fertilizers Corporation Ltd (HFCL) and
Fertilizer Corporation of India (FCI).
All non gas based urea units will be converted to gas within the next three years. Under
the above scenario, the total requirement of gas for the fertilizer sector by the 2011-12 is
expected to be 76.26 MMSCMD. The break-up of gas requirement year wise and the
corresponding production capacity of urea are:-
City Gas Distribution
This is another sector which has a high growth potential. World-wide, city gas
distribution has grown hand in hand with the gas sector development in terms of supply
infrastructure and transmission infrastructure. With the expected growth in the gas supply
and the simultaneous creation of gas inter-state transmission infrastructure in India, this
sector is bound to grow in the coming years.
With the emphasis on clean environment, this sector would get the necessary thrust in the
coming years. In line with this, various players, primarily led by GAIL, have drawn up
ambitious plans to roll out city gas infrastructure across a number of cities in the country.
From the existing coverage of 10 cities, the coverage is expected to grow to 40 cities in
the next 5-7 years. This sector can be expected to grow at double digit rates after 2010.
The demand in this sector was about 11 MMSCMD in 2006-07 and 12.08 MMSCMD in
2007-08. Assuming a conservative annual growth of 8 percent, the demand would be:-
Petrochemicals/Refineries/Internal Consumption and Sponge Iron/Steel and other
Industries
The demand as per the industry estimates in the Petrochemicals/Refineries and

Internal Consumption (of Gas Industries) sectors was about 23.71 MMSCMD in
2006-07. These industries are estimated to grow in line with country’s projected
economic growth. Hence an annual growth rate of about 7 percent is assumed for
the next 5 year period, which would result in a demand of 33.25 MMSCMD by the
2011-12.
Similarly, the sponge iron/steel sector is also expected to grow at the same rate of 7
percent from the current level of 6 MMSCMD, reaching a level of 7.86 MMSCMD
by the 2011-12.
INDIAN GAS SECTOR: CONSUMPTION PATTERN
10900 MW
12% 12 MMTPA
58%
FERTILISER
POWER (21 MMTPA)
(90800 MW)
1 MMTPA 2.5 MMTPA

31%
43%
LPG + LIQUID
PETROCHEMICALS HYDROCARBON
(2.3 MMTPA) (8 MMTPA)
Non gas based units
SIGNIFICANT POTENTIAL FOR GAS IN ALL END USE SEGMENTS
17
Based on the above analysis, the consolidated demand
estimate is presented as:-
Sector Wise Gas Demand Projections (2007-2012)
2007-08 2008-09 2009-10 2010-11 2011-12

Power 79.70 91.20 102.70 114.20 126.57
Fertilizer 41.02 42.89 55.90 76.26 76.26
City gas 12.08 12.93 13.83 14.80 15.83
Industrial 15.00 16.05 17.17 18.38 19.66
Petrochemicals/ 25.37 27.15 29.05 31.08 33.25
Refineries/Intern
al Consumption
Sponge 6.00 6.42 6.87 7.35 7.86
iron/Steel
Total 179.17 196.64 225.52 262.07 279.43
Natural Gas Supply Considerations
Meeting the significant potential for growth in natural gas demand in India
will require a substantial increase in gas supplies. This could be achieved
through a number of avenues, including an increase in domestic gas
production, the construction of natural gas pipelines from international
sources of supply, and the expansion of LNG imports. Each of these options
has different cost profiles, energy security implications and other
characteristics that will affect its contribution to India’s growing natural gas
requirements over the medium to longer term.
Domestic natural gas production
As discussed earlier, a number of domestic gas fields currently supply

India’s gas requirements. Offshore fields, mainly the Mumbai High field,
produced around 22.6 billion cubic metres of gas (equivalent to 16.5 million
tonnes of LNG) in 2005-06, around 70 per cent of India’s total gas
production (MoPNG 2006b). Onshore fields, particularly in Gujarat, Assam
and Andhra Pradesh, produced 9.6 billion cubic metres of gas (equivalent to
7.0 million tonnes of LNG) in 2005-06. While there has been some growth in
natural gas production from onshore fields over the past decade, production
from offshore fields peaked in 2003-04 and has since declined as resources in
the Mumbai High gas field are depleted.
A number of offshore natural gas discoveries in India over the past several
years have increased the country’s gas reserves. The most notable recent
finds have occurred in the Krishna Godavari (KG) basin located in the Bay of
Bengal off India’s east coast. India’s total proved gas reserves are 1.1 trillion
cubic metres and at current production rates will last for 34 years (BP 2007).
This does not include many of the recent KG basin finds, which are yet to be
proven.
The first gas from the KG basin is due to be delivered onshore by the end
of 2009, initially producing around 14.6 billion cubic metres of gas a year
(equivalent to 10.7 million tonnes of LNG). In early 2007, a gas transport and
gas sale and purchase agreement was signed between Reliance Industries
Limited (RIL) and GAIL. The agreement will enable RIL to use GAIL’s
pipeline network in Andhra Pradesh, Madhya Pradesh and other states, and
entitle GAIL to sell a share of RIL’s gas from the KG basin. The capital costs
of RIL’s KG basin project are estimated to be US$5.2 billion (RIL 2007).
Official Indian Government natural gas production projections for the 11th
five year plan show a significant increase in production from 2009, when the
KG basin is due to commence production. However, this is balanced against
falls in supplies from existing gas fields over the life of the plan. Two
scenarios are presented by the Indian Government, with natural gas
production projected to range between 39.5 and 73.8 billion cubic metres in
2011 in the normal and optimistic scenarios respectively. The Indian
Government has stated that there are a number of uncertainties surrounding
the commencement of supplies in the optimistic scenario.
Gas Supply Outlook

On the gas supply side, the domestic supplies would be primarily driven by the
expected supply from the KG basin by RIL in 2008-09.
The supply projected by ONGC in the Plan period is expected to fall from 47.28
MMSCMD in 2007-08 to 32 MMSCMD in 2011-12 and
Supply from Private players/JVs is expected to increase from 23.26 MMSCMD to
about 57.22 MMSCMD in 2011-12.
This increase from private players is primarily due to the 40 MMSCMD gas
supply addition from RIL from 2009-10 onwards. DGH has projected expected
additional supplies of 20, 30 and 40 MMSCMD from RIL fields in 2009-10, 2010-
11 and 2011-12 respectively and 54 MMSCMD from GSPC in each of the above
years. How much of these additional supplies would actually fructify would
actually determine the prospects of the domestic supply scenario and would have a
profound influence on the overall demand-supply balance.
These additional supplies have been considered under scenario II, an optimistic
scenario. Keeping the above aspects in view, the total projected gas supplies
would be 80.54 MMSCMD in 2007-08 expected to grow to 108.3 MMSCMD in
2011-12 under scenario I (Normal Scenario). In Scenario II (Optimistic Scenario),
the supplies would grow from 80.54 MMSCMD in 2007-08 to 202.30 MMSCMD
in 2001-12. The detailed supply projections under the two scenarios are:
Gas supply projections (MMSCMD)
2007- 2009- 2010- 2011-

Sources 2008-09
08 10 11 12
ONGC + OIL (A) 57.28 58.42 55.69 54.67 51.08
Pvt./ JVs (As Per DGH) (B) 23.26 61.56 60.28 58.42 57.22
Projected Domestic Supply 80.54 119.98 115.97 113.09 108.30
Gas supply projections (MMSCMD)
2007- 2009- 2010- 2011-

Sources 2008-09
08 10 11 12
(A+B)
Additional Gas Anticipated
74 84 94
(C)
Total Projected Supply
80.54 119.98 115.97 113.09 108.30
Scenario 1 (A+B)
Total Projected Supply
80.54 119.98 189.97 197.09 202.30
Scenario 2 (A+B+C)
The estimated gap between domestic gas production and supply is mainly on
account of internal use by the producers themselves, technical flaring and gas
shrinkages.
Looking at the overall demand projections and even the most optimistic scenario
of expected domestic supplies, it is very clear that there would be a supply
shortfall. Therefore, there is a need to step up imports in the coming 5 years. There
is already an import of LNG to the tune of 18 MMSCMD by PLL at Dahej. This is
being supported by the commencement of LNG supply from the Hazira Terminal
of Shell which is, however, yet to stabilize. To augment the shortfall, the country
is already pursuing imports, both through the LNG route and the transnational
pipeline route.
LNG/Supplies through Transnational Pipelines

LNG is already an accepted resource in the country. India is located in a
region with significant reserves of natural gas. India currently has one long
term LNG supply contract between Petronet and Qatar’s Ras Laffan LNG
company for the phased supply of 7.5 million tonnes a year, with 5.0 million
tonnes contracted from 2004 to 2009 and the full volume from 2009 to 2029.
While other long term agreements have also been signed, including with Iran,
these agreements have not been finalized and have not been included in the
study. Some of the main features of India’s LNG supplies are:-
The 5 MMTPA Dahej terminal of PLL is operating at full capacity.
The Hazira terminal of Shell with a capacity of 2.5 MMTPA is operational but is
yet to stabilize. Given the non-stabilisation of Shell Hazira terminal, it has been
assumed that Shell terminal would operate at 2.5 MMTPA capacity during next 5
years.
The Dahej terminal is set to expand to 10 MMTPA by 2010-11.
Besides, the planned Kochi terminal of PLL with a capacity of 2.5 MMTPA
(expandable to 5 MMTPA) is expected by 2010-11.
The 5 MMTPA Dabhol terminal is projected to be fully operational by 2009-10.To
begin with the supplies would be 1.2 MMTPA, which would increase to 2.1
MMTPA in 2008-09 to cater to the Dabhol Power plant. This terminal would also
throw up a merchant sale volume of 2.9 MMTPA in 2009-10 when long term
LNG is contracted.
The confirmation of Mangalore LNG terminal could be a possibility and 1.25
MMTPA imports could perhaps be expected at this terminal by 2011-12.
Given this scenario, the LNG supply is projected to reach a level of 23.75
MMTPA by the year 2011-12 (Potentially it can add up 83.12 MMSCMD supplies
at full capacity).
Though there is a possibility of supply of about 18 MMSCMD of gas from the
Myanmar through the proposed Myanmar–India Pipeline in 2010-11/2011-12, this
has not been considered for analysis purpose due to the uncertainties involved.
Given the present level of inter-Governmental discussions on the other two
pipelines, viz., Iran-Pakistan-India pipeline and Turkmenistan-Afghanistan-
Pakistan-India Gas Pipeline, no gas supplies have been projected through these
pipelines in this study. The overall LNG supply projections are given as:-
LNG supply projections
LNG Supply Source 07-08 08-09 09-10 10-11 11-12

Dahej 5.00 5.00 7.5 10.00 10.00
Hazira 2.50 2.50 2.50 2.50 2.50
Dabhol 1.20 2.10 5.00 5.00 5.00
Kochi - - - 2.50 5.00
Mangalore - - - - 1.25
Total LNG Supply (MMTPA) 8.70 9.60 15.00 20.00 23.75
Total LNG Supply 30.45 33.60 52.50 70.00 83.12
(MMSCMD)
Assumptions: 1) Hazira expansion to 5.0 MMTPA is not considered in the study.
2) Mangalore terminal is expected to be partially commissioned in 2011-12.
The import plans of various companies would to a great extent augment the
supplies to meet the demand shortfall. Given the two scenarios of supply, the total
supply including LNG is expected to increase from 100.99 MMSCMD in 2007-08
to a level of 181.42 MMSCMD in 2011-12 under Scenario I (Normal Scenario).
Under Optimistic Scenario II, the total gas supply is expected to increase from
100.99 MMSCMD in 2007-08 to 275.42 MMSCMD in 2011-12, especially driven
by the additional supply of RIL and GSPC from 2009-10 onwards.
Demand – Supply Gap for Natural Gas

It is expected that there would be a demand–supply gap (shortfall in supply) to the
extent of 67.98 MMSCMD in 2007-08 which would fall to 42.81 MMSCMD in
2008-09 in both the scenarios. From this level, the gap would increase steadily to
91.13 MMSCMD by 2011-12 in Scenario I, whereas under Scenario II, the gap
would by and large be bridged from 2009-10 onwards and there is expected to be a
demand–supply balance during the last 3 years of the XI Plan period. The overall
demand–supply balance is presented below:
Overall Gas Demand Supply projections
Supply 07-08 08-09 09-10 10-11 11-12
Projected Domestic Supply

80.54 119.98 115.97 113.09 108.30
(ONGC /JV/ PVT) (A)
Additional anticipated supply (B) 74 84 94
LNG (C) 30.45 33.60 52.50 70.00 83.12
Total Supply (A+C) Scenario 1 110.99 153.58 168.47 183.09 191.42

Total Supply (A+B+C) Scenario 110.99 153.58 242.47 267.09 285.42
2
Demand (MMSCMD) 179.17 196.64 225.52 262.07 279.43

Demand Supply Gap I 68.18 43.05 57.05 78.97 88.03
Demand Supply Gap II 68.18 43.05 -16.95 -5.03 -5.97
CRISIL Research
Demand to grow at a CAGR of 12 % over next 5 years
Historically, demand for natural gas has always been higher as compared with supply.
However, due to the global slowdown, the Indian economy has also started showing signs
of cooling demand growth. In such a scenario, the demand supply gas is expected to
shrink over the next 5 years. Though natural gas supply (domestic supply and firm LNG
imports) is expected to increase at a CAGR of 14.0 percent, it may not be sufficient to
service the demand. CRISIL expects this deficit to be serviced by the spot LNG cargoes.
Lower projected demand is an outcome of CRISIL outlook on power and fertilizer

projects. With Greenfield power projects getting least priority in the gas utilization
policy, some of the projects considered may not materialise, and therefore, the demand
supply gap would not arise.
Going forward, CRISIL expect demand to be driven by growth in captive power plants
and growing city gas distribution, mainly comprising CNG. Also, with fertilizers getting
the highest priority in gas utilization policy, CRISIL expect at least some of the closed
units to reopen operations, thus increasing the gas demand. Increase in captive power
plants and city gas distribution will change the consumption mix considerably. Share of
petrochemicals, refineries and sponge iron plants is expected to decrease substantially, as
there aren’t many planned additions in these sectors.
Natural gas demand break up
Mmscmd 2007- 2008- 2009- 2010- 2011- 2012- CAGR( %)

08 09(p) 10(p) 11(p) 12(p) 13(p)
Power 44.0 56.6 60.8 60.8 66.8 74.6 11.2
Captive power 11.8 12.4 18.3 19.7 21.6 23.1 14.3

plant
Fertiliser 32.7 33.3 37.8 48.7 56.9 58.2 12.3
Petrochemicals 6.3 6.4 6.7 6.7 6.7 6.7 1.2
Sponge iron 4.8 4.9 4.9 4.9 5.0 5.0 1.0
Refinery use 9.3 9.8 10.4 10.6 10.9 11.3 3.8
City gas 5.3 7.4 10.3 13.7 17.6 22.1 32.8
distribution
Total 114.2 130.9 149.1 165.1 185.6 201.0 12.0
P = projected
Note
Demand projections do not include the unmet demand that may materialise with gas
availability
Source: CRISIL Research
city gas
2007-2008
distribution, 5.3
refinery use,
9.3
sponge iron,
4.8 power
captive power plants
petrochemicals power, 44
, 6.3 fertilisers
petrochemicals
sponge iron
refinery use
fertilisers, 32.7 city gas distribution
captive power
plants, 11.8
2012-2013 -P
power, 11.2 power

city gas captive power plants
distribution, captive power fertilisers
32.8 plants, 14.3 petrochemicals
c
sponge iron
refinery use, fertilisers, 12.3 refinery use
3.8 city gas distribution
petrochemicals
sponge iron, 1 , 1.2
P= Projected
Source= CRISIL Research
City gas distribution to be the main driver for demand growth
Demand from city gas distribution, which includes the compressed natural gas (CNG)
stations, piped natural gas(PNG) to industries for heating, and domestic and commercial
PNG, account for 5 percent of total natural gas demand. Gas as a heating fuel is used in
many industries such as ceramics, paper, metals, automobile components, chemicals,
textiles, food processing and tea.
City gas distribution is expected to boost the demand for natural gas. It is expected to
record a CAGR of over 32.5 percent as many companies have been aggressively
announcing plans for city gas distribution. City gas distribution is also getting a boost
from the government. City gas distribution plans getting higher priority than the green
field power plants proves the fact that government as liquefied petroleum gas (LPG) and
superior kerosene oil(SKO) consumption would reduce.
CNG is expected to grow at a rate lower than the overall city gas distribution growth rate.
Currently CNG demand is around 3.8 mmscmd and accounts for over 71 percent of the
city gas distribution demand. PNG is still to pick up pace and hence going forward PNG
and industrial usage are expected to grow faster as compared to the CNG.
Most of the industries mentioned earlier, use the costlier fuel oil or naphtha either
for heating purposes, or as a raw material or feedstock. This fuel, feedstock or raw
material can be easily substituted with natural gas. Even spot LNG is priced lower
than naphtha or fuel oil. Hence, any gas availability will prove to be beneficial for
these industries. With gas supply situation poised to change from 2009-10, the
industries, currently operating on naphtha or fuel oil, are expected to switch to gas.
Fuel Price Comparison
25
($ per mmbtu)
20
15
Series1
10
5
0
(imported)
Naphtha
(domestic)
Pooled
LNG ($ 10
Fuel oil
natural gas
indigenous
LNG-
mmbtu)
Coal
Coa
Note:-
1. Prices are exclusively of transportation cost and sales tax.
2. Exchange rate at Rs42.5 per dollar.
3. Domestic natural gas price is landfall price inclusive of royalty.
4. LNG price has been calculated on the basis of $4.93 per mmbtu and 9500
kcal/scm
5. Domestic coal prices are for ‘E’ grade at pithead and includes royalty
6. Coal(imported)prices are landed cost of coal(c&f Australia),for 2007-08
7. Naphtha & FO prices are average prices during FY2007-08
Source=CRISIL Research
In 2007-08, shell’s Hazira terminal operated at over 80 percent even when some spot
LNG cargoes fetched prices as high as $ 20 per mmbtu. Also, during the same period,
naphtha consumption declined. This proves that industries are favouring LNG over
naphtha even at such high rates. In the first quarter of 2008-09, price of fuel oil and
naphtha have spot up even higher, thereby increasing the demand for LNG. As the power
and fertilizers sector require large quantities of gas, they prefer long term gas contracts.
Hence, the most of these spot cargoes would have been sold to other industries. At
average price of over $13/mmbtu for LNG, though fuel oil will become competitive with
LNG, naphtha will continue to be the costliest energy source and gas will be preferred,
instead.
The heating requirement of industries is expected to increase at a CAGR of over 35
percent, while the PNG demand(domestic and commercial) is expected to grow the
fastest at a CAGR of over 49 percent.
Power and fertilizers-will continue to be major consumers
The power and fertiliser sectors have historically been the major consumers of gas, and
are expected to retain their share in the demand for natural gas. In 2007-2008, the two
sectors together accounted for around 67 percent of the total demand. However, they
accounted for 65 percent of the total off take of gas in 2007-08. historically also, the
demand from these two sectors has always accounted for more than 65 percent of the
total demand. Going forward as well, we expect most of the demand to come from these
two sectors. In 2007-08, demand from the power and fertilizers sectors together was 76.6
mmscmd, which is expected to increase to around 133 mmscmd in 2012-13 and is
expected to have a 66 percent share of demand.
Demand from the power and fertilisers sectors is expected to grow at around 11.6
percent, while the total demand is expected to grow at around 12 percent, hence, both the
sectors together will be able to maintain their share of demand. Demand has been
estimated, based on the gas utilization policy, availability of gas supply in the area,
expected new capacities, as well as switch in fuel by existing capacities. Currently, power
accounts for around 38 percent and fertilisers for 29 percent of the total demand for gas,
in 2012-13, we expect power to continue to account for 37 percent of total natural gas
demand, and fertilisers for around 29 percent.
Power
Power, capacities using natural gas as fuel ,accounts for almost 10.2 percent of the total
power generation capacities. Our country has been facing huge power deficit situation
and this situation is expected to continue till 2012-13. Hence, the government is taking
initiatives to increase power generation and is encouraging thermal as well as hydel
power capacities. As a result, demand from the power sector is expected to grow at a
healthy rate.
CRISIL research has assumed a realistic outlook on gas-based power plant additions,
based on current project status and gas availability. The rising demand for natural gas
from the power sector is attributed to the expected capacity switches, as well as new
expected additions. CRISIL expect gas demand from around 7900MW of capacities over
the next 5 years. Of this, around 4110 MW would be switch capacities while 3880MW
would be contributed by new additions. Some of the major projects not considered by us
during the projection horizon are: reliance power limited’s Dadri power project(3560
MW),National Thermal Power Corporation’s Projects at Kawas and Gandhar(2600MW),
Maharashtra State Electricity Board’s 1040MW plant in Uran and Karnataka Power
Corporation Limited’s project at Bidadi,Karnataka(700MW). These projects have not
been considered as fuel supply agreement(FSA) has not yet been signed, nor has land
been acquired. Hence, CRISIL do not expect these projects to be ready for
commissioning before the end of 2013. Also, we have not included government projects
of over 10,000MW in our projections because of our outlook on capacity additions in the
power sector.
By 2012-13, the share of natural gas in the power sector is expected to decrease from the
current 10.2 percent as we expect lower additions in power plants using natural gas as
fuel. With green field power plants getting last priority in gas utilization policy, CRISIL
Research expects that some of the gas based power plants planned may not materialise
while coal based power plants would get encouragement.
Natural Gas-Demand forecast for power generation
(MW) 2006- 2007- 2008- 2009- 2010- 2011- 2012-

07 08E 09P 10P 11P 12P 13P
Gas-based capacity 11446 14730 15824 15824 17409 19435
Existing capacity 9631
Cumulative 370 1194 1570 1570 2220 4247
additions
Cumulative switch 1,445 3,906 4624 4624 5558 5558
Gas requirement 16,043 20646 22179 22179 24400 27241
(mcm)
Incremental 2544 4604 1533 0 2221 2840
demand
Naphtha-based
capacity
Naphtha 4159 2116 1390 1332 840 210
requirement (‘000
tpa)
Incremental demand 0 -2043 -726 -58 -493 -630
E: Estimated; P: Projected
Assumptions
1) PLF of 80% has been assumed, except for kayamkulam and kochi which are
assumed to have a PLF of 70%.
2) Calorific value of natural gas has been assumed at 9000 Kcal/scm.
3) Calorific value of naphtha has been assumed at 10500 Kcal/kg.
4) Heat rate of power plants has been assumed at 1800 Kcal/ kwh.
5) Conversion from MW to mcm = MW*1000*365*24*0.8*(1800/9000)/10^6.
Fertilizers
Demand for natural gas from the fertilisers sector is based on our outlook for the
fertilisers sector. The government has emphasised that fertilisers plants based on
naphtha/fuel oil/LSHS should convert to natural gas by march 2010, failing which the
higher production costs would not be reimbursed. As a result, fertiliser players have been
under pressure to convert to natural gas. Also, the high costs of naphtha and fuel oil have
been instrumental in accelerating the switch. The government has come out with gas
utilisation policy which gives the priority list for supply of gas from the new finds. As per
this policy, existing fertiliser units get the top priority for gas supply amongst the existing
plants. Also the green field fertiliser plants have got the top priority in the green filed
projects priority list. Based on the availability of gas, fertiliser plants will either switch to
gas or close down operations till gas becomes available. Over the next 5 yars, we expect
gas demand from over than 13.3 mtpa of fertiliser capacities, of which almost 5.7 mtpa
will come through switches.
(‘000 tpa) 2006- 2007- 2008- 2009- 2010- 2011- 2012-

07 08 E 09 P 10 P 11 P 12 P 13 P
Gas based capacity 17070 17420 19736 25440 29732 30442
Existing capacity 13102
Cumulative additions 0 244 2560 5326 7636 7636
Cumulative switch 3967 4074 4074 7012 8994 9704
Gas requirement (mcm) 11919 12164 13781 17764 20761 21256
Incremental demand 1782 245 1617 3983 2997 496
Naphtha based capacity 1992 1885 1885 779 380 0

Naphtha requirement 1195 1131 1131 467 228 0
FO/LSHS-based 1502 1502 1502 0 0 0

capacity
FO/LSHS requirement 841 841 841 0 0 0
E: Estimated; P: Projected
Assumptins
1. operating rates
Naphtha 100 %
Gas 105%
FO/LSHS 100%
2. Calorific value
Gas 9000 kcal/scm
Naphtha 10500 kcal/kg
FO/LSHS 9600 kcal/kg
3. Input norms
Gas=0.665 scm per tonne of urea. Energy reqt for urea has assumed at 6 million
kcal/tonne
Naphtha= 0.6 tonnes per tonne of urea
FO/LSHS = 0.56 tonne per tonne of urea
4. New capacities would be commissioned based on gas availability.

Research Methodology
sample
For the purpose of completion of this project employees were interviewed. The sample
size of 30 employees were taken in order to come up with the result
Sample technique
Sampling technique: convenience sampling.
Tools & techniques for data collection
Tools & techniques for data collection as follows
Statistical Tool: Ranking Scale
Research Design: Descriptive Study
Primary data collection:
Questionnaires were being filled up by the Employees.

Interview were given by Mr. Shantanu Basu(Manager,Gas Marketing)
Secondary source of data collection:
Various internet sites,books,various reports were searched in order to find information

useful for completion of this project.
Data Analysis and Interpretation
1. 40% employees think that reason for growing demand in natural gas in
india is its lower cost .
india is Govt.regulations
india is its eco friendly qualities.
india is its efficiency in comparison of other fuels.
1. 55% employees think that the obstacles for demand for natural gas as a fuel
in India is its non availability of natural gas.
2. 20% employees think that the obstacles for demand for natural gas as a fuel
in India is its poor infrastructure.
3. 15%employees think that the obstacles for demand for natural gas as a fuel
in India is its improper supply management
4. 10%employees think that the obstacles for demand for natural gas as a fuel
in India is its high cost.
1) 45% employees think that power sector is the key demand driver for natural gas.
2) 30% employees think that fertilizer sector is the key demand driver for natural gas
3) 15% employees think that transportation sector is a key demand driver for natural
gas.
4) 11% employees think that city gas distribution sector is a key demand driver for
natural gas
5)9% employees think that other sector like sponge iron, refinery etc are the key
drivers for natural gas.
1) 45% employees think that in western region,the consumption of natural gas is more.
2) 35% employees think that in northern region,the consumption of natural gas is more.
3) 15% employees think that in southern region,the consumption of natural gas is more.
4) 5% employees think that in eastern region,the consumption of natural gas is more.
1) 65% employees think that Gail generated a maximum demand for natural gas with
Indraprastha Gas Limited(IGL)
Mahanagar Gas Limited(MGL)
Bhagyanagar Gas Limited(BGL)
Green Gas Limited(GGL)
Aavantika Gas Limited(AGL)
1) 40% employees think that people are still not ready to accept natural gas because
of lack of awareness
it is not easily available near home.
of its high cost
of fear of using natural gas
1) 80% employees think that Reliance Industry Limited(RIL) is a close
competitor of Gail
2) 20% employees think that Gujarat State Petroleum Corporation(GSPC) is a

close competitor of Gail
1) 55% employees think that, by 2011-12 natural gas may accomplish 10% market
share in total fuel market in India
1) 66% employees think that India may not become a self sufficient w.r.t Natural
gas
2) 34% employees think that India may become a self sufficient w.r.t Natural gas
KEY FINDINGS
 The main reason for growing demand for natural gas in India is its less cost as
compared to other fuel.
 The obstacles for demand for natural gas as a fuel in India are:- non availability of
natural gas and poor infrastructure.
 Power and fertilizer sector are the key demand driver for natural gas.
 Northern and Western region have more demand for natural gas as compared to
Southern and Eastern region because of Industrialisation in these region.
 Gail generated a maximum demand for natural gas with Indraprastha Gas
Limited(IGL)
 Reliance Industry Limited(RIL) is a close competitor of Gail.
 Price and Government regulation affects the demand of natural gas.
 Gail has a different JV’s to deal with people . they don’t want to do directly
because it includes high cost for setting up their own service stations.
 Gail is going to do collaboration with Reliance Industry Limited(RIL).
 Demand projections indicate robust growth in gas demand over the eleventh plan
period. Demand is projected to rise from 179 mmscmd in 2007-08 to 281
mmscmd by the year 2011-12.
 The domestic supply of gas, during the eleventh plan period is expected to rise
sharply mainly on account of the recent discoveries in the K.G.Basin. The
domestic gas supply figure estimates are 81 mmscmd in 2007-08 going up to 202
mmscmd by 2011-12 in optimistic scenario.
 The continuous shortfall of natural gas supply led to import of LNG which lead to
India’s recognition as a serious player in international gas market. Import of LNG
which commenced in 2004 for the first time is projected to increase to 23.75
mmtpa (83.12 mmscmd) during the eleventh plan period with new LNG
regasification terminals being set up in the country.
 Gas Sector requires large investments in setting up of terminals, pipeline

infrastructure, processing facilities, city gas networks. It has been projected that
around US $ 10 bn. would be required by the natural gas sector during the next 2-
3 years to meet the requirements in India
RECOMMENDATION
 Energy Diversification
Diversification of Indian energy supply sources is essential pre condition for

energy security. Natural gas from wells (conventional sources) alone will not be
sufficient to meet the growing requirement of the expanding economy. There is a
need to pursue with all earnest viable alternatives like gas hydrates, coal bed
methane, gas from deep-sea, underground coal gasification (UCG), and gas
storage in the upstream side, CNG by ships and on-board LNG re-gasification in
the midstream side etc. Such diversification will help us in managing the
imbalance in the production and consumption of gas in the country.
 Infrastructure Support
The development of sound gas sector in India requires robust infrastructure support in
terms of physical facilities like pipelines, LNG terminals, rigs, turbines, CNG kits,
compressors, gas based automobiles etc. The financial infrastructure can be in terms of
provision of competitive credit facilities, tax concessions, tax holidays etc. In addition to
this, development of a pool of skilled human resources is a sine qua non for supporting
the likely growth in the sector
 Spread awareness
The emergence of private initiative will further increase the awareness among
people about the likely beneficial uses of natural gas and consequently demand for a
cleaner green fuel escalates to new highs.
 Pricing mechanism
There is a need to review pricing mechanism for natural gas both for domestically
produced gas as well as LNG. Let the price be determined by free play of market
forces of demand and supply.
 Government regulation
PNGRB is evolving in their functions as sector regulators. Govt. should enlarge their
role as independent and transparent regulator.
 More Joint ventures

Gail should exploit the northern belt and tie up with companies located near the
belt. In gas marketing, the eastern belt(Bihar, west Bengal) should be tapped as there
is tremendous potential as well as opportunity which can be harnessed.
 Retain their customers
The emergence of new players and extent of market liberalization may pose a threat
to Gail and the essence to combat the creeping competition is by retaining the existing
customers and creating sound prospects. This can be done by creating both tangible
and intangible benefits.
Conclusion
In Tenth Five Year Plan (2002-07) Indian economy grew at a healthy rate of 7.7% per
year while during the same period total primary energy consumption in India has
increased from 307.8 million tones of oil equivalent (mtoe) in year 2002 to 404.4 mtoe in
year 2007 showing a CAGR of 5.61%. The demand for energy has been growing rapidly
with the growth of the economy, changes in the demographic structure, rising
urbanization and socio-economic development. In this perspective, the progress is very
encouraging however the resulting fall out in the form of increasing demand for energy
resources is a complicated task to manage. A look at the Indian energy consumption by
fuel type reflects that coal and oil are predominant sources of energy followed by natural
gas. In 2007 natural gas accounted for around 9% of the total primary energy
consumption.
In India the demand for natural gas is traditionally being driven by power and fertilizer
sectors with city gas distribution (CGD) and industrial sectors emerging as growing
markets for utilization of natural gas. In 2007 power and fertilizer sectors together
constitute around 63% of the total natural gas consumption in the country.
India’s integrated energy policy envisages fulfilling energy demand of all sectors across
country with safe and convenient energy at the least cost in a technically efficient,
economically viable and environmentally sustainable manner. Natural gas is relatively an
eco-friendly, clean, safe fuel with higher thermal efficiency and easy transportability. The
merits of natural gas over alternate hydrocarbon fuels underscore its increasing
significance in the energy policy of India and are pushing it to focus of all the
stakeholders in the value chain.
Gas Demand
The Indian economy is projected to grow at 9% on an average during the XIth Five Year
Plan period from 2007 to 2012. This ambitious economic growth will drive the demand
for natural gas in the country. The demand for natural gas will be 196.64 million standard
cubic meter per day (mmscmd) during 2008-09 which will escalate to 279.43 MMSCMD
at the end of 2011-12. The share of different sectors in the total demand is projected to be
changing during the entire eleventh plan period. The share of power sector in total
demand is presumed to be increasing from 46.4% in 2008 to 45.3% in 2012. Similarly the
fertilizer sector’s share will increase from 21.8% (in 2008) to 27.3% (in 2012). It can be
seen that just like present demand scenario in future also, the demand for natural gas in
India will be primarily driven by power and fertilizer sector.
The share of City Gas sector, Industrial sector, Petrochemicals / Refineries / Internal
Consumption (like LPG) sector and Sponge Iron / Steel sector will be decreasing in the
overall demand. The share of city gas sector will decrease from 6.6% (in 2008) to 5.7%
(in 2012). Industrial sector will have a share of 8.2% in 2008 which will come down to
7% in 2012. Petrochemicals / Refineries / Internal Consumption sector will share 13.8%
of total natural gas demand in 2008 which will go down to 11.9% in 2012. Sponge Iron /
Steel sector will see its share in total demand decreasing from 3.3% in 2008 to 2.8% in
2012.
The scope of demand within a particular sector can be better understood by the usage
pattern of gas and other alternative fuels/feedstock in its units. For instance, in the Power
Sector, only 11% of total power generation capacity is based on gas whereas in the
Fertilizer sector, about 58% of production is based on gas. The corresponding figures of
gas based units in the Petrochemicals and LPG/Liquid Hydrocarbon sectors are 43% and
31% respectively.
The demand for natural gas during the period 2007-12 will be growing with a
compounded annual growth rate (CAGR) of 9.29% (179.17 in 2007 to 279.43 mmscmd
in 2012) to match the projected growth rate of 9% for the economy. However to meet
such a huge demand will be a complicated task.
Gas Supply
India remains a gas deficit country as its domestic gas resources are yet to be fully
exploited for production. The NELP has pushed forward the exploration and production
activities but the desired results are yet to be achieved.
The Xth Plan period (2002-07) witnessed some significant developments in the gas
supply side scenario. Reliance announced gas discovery of around14 trillion cubic feet
(tcf) in 2002 in the KG basin on the east coast of India. In 2004, first batch of imported
Liquefied Natural Gas (LNG) arrived on Indian shores when Petronet LNG Ltd. (PLL)
started commercial supplies of LNG from its 5 million tonnes per annum (mtpa) Dahej
terminal. In 2005, Shell (India) Ltd.’s 2.5 mtpa LNG terminal became operational. This
was the first private sector firm to enter the gas supply segment. In 2006, Ministry of
Petroleum and Natural Gas (MoPNG) revise the prices of APM gas to make it in
synchronization with open market prices of gas.
The above events have influenced the supply scenario in the country. The supply
projections for XIth Five Year Plan indicate supply to be increasing from 80.54
MMSCMD in 2007-08 to 108.3 MMSCMD in 2011-12 with a CAGR of 6.1% under
normal scenario. The CAGR of natural gas supply at 6.1% is lesser than the CAGR of
its demand at 9.29% during the plan period of 2007-12 indicating the requirement of
imports.
In optimistic scenario the supplies would grow from 80.54 MMSCMD in 2007-08 to
202.30 MMSCMD in 2011-12. The optimism is due to likelihood of additional gas finds
in the country including Reliance KG Basin gas find.
The gap in demand and supply of natural gas, under normal scenario, for a year as a
percentage of total supply ranges from 64% to 158% of total supply for that year
reflecting the scope of imports in the country. The shortfall of domestic supplies will
primarily be met with LNG imports. The total LNG imports in the country are projected
to increase from 30.45 mmscmd in 2007 to 83.12 mmscmd in 2012. The import of LNG
as percentage of total demand in the country ranges from 17% in 2008 to around 30% in
2012.
Thus despite imports of LNG India will still face short supply of gas to meet its demand.
One of means to calibrate the shortfall of gas is to allow price determination of natural
gas by the free forces of demand and supply.
Scope of further study
1) To study the Impact of Krishna-Godaviri(K.G)Basin on Natural Gas market
2) Gail is going to do collaboration with Reliance Industry Limited(RIL). To

study the paradigms for that collaboration.
Annexure
Questionnaire
NAME:
Designation:
This survey has been designed to better understand the different prospects of
natural gas in India. Your feedback is of high importance to my project. I humbly
request you to give your feedback as per your convenience.
Plz.prioritize on a scale of 1 to 5…..1 for the minimum………..5 for the

maximum (Q1 to7)
Q (1) what are the reason for growing demand of natural gas in India?
a) Less cost as compared to other fuel( ) (b) More efficient than other fuel( )
c) Eco friendly( ) (d) Govt. regulation( ) e) Other…. (plz specify)
Q (2) what are the obstacles for demand for natural gas as a fuel in india?
a) non availability of natural gas( ) b) high cost( )
c) poor infrastructure( ) d) improper supply management( )
Q (3) which sector is the key demand driver for natural gas?
a) power sector( ) b) fertilizer sector( ) c)city gas sector( )
d) transportation sector( ) e) other………………(plz specify)
Q (4) In which region, the consumption of natural gas is maximum?

a) northern region( ) b) western region( )
c) southern region( ) d) eastern region( )
Q (5) In which region, the consumption of natural gas is minimum?

a) northern region( ) b) western region( )
c) southern region ( ) d) eastern region( )
Q(6) why people are still not ready to accept natural gas instead of other fuels?
a) lack of awareness( ) b) non availability easily/near home( )
c) fear ( ) d)high cost as compared to other fuel( )
Q(7) who is your close competitor?

a) RIL(Reliance Gas Limited) b) GSPC( Gujarat state petroleum corporation)
c) Others………………………..plz specify
Q(8) by what time natural gas may accomplish 10% market share in total fuel market in india?
a) 2009- 2010 b) 2010 – 2011 c) 2011 – 2012 d) 2012 – 2013 e) 2013-2014
Q(9) what do you think wheather, India may become self sufficient in natural gas?
a) if yes…….by what time

b) if no…….why so
Personal interview
Q1) Does the price affect the demand of natural gas?
Q2) Are you targeting any other sector than the existing sectors for increasing the
demand of natural gas
Q3) Gail estimated the future demand according to the different scenario(price/mmbtu).
what are the criteria to select such scenario.
Q4) GAIL is a market leader in this sector but now private companies such as Reliance
Industry Limited entered in to this business. What do you think, how
it will affect the demand or market share of GAIL.
Q5) From the data, it shows that you have a less demand in southern and eastern region
of India as compared to northern and western region of India. What are the reasons
behind it.
Q6) Does Gail provide any subsidiary to those customer who are demanding more
quantity of natural gas
Q7) How the govt. intervention/regulations affect the demand of natural gas?
Q8) Don’t you think, if GAIL supplies directly to the customer specially in city gas and
transportation sector then the cost is reduced and the profit and the demand may increase?
Q9) GAIL estimated the demand of natural gas before also, so did you achieve that
projected demand? What was the result at that time?
Q10) What are Gail’s future plans for increasing the business w.r.t natural gas?
Conversion Table
1 Bcm 1 year of gas= 2.8 MMSCMD
1 TCF of gas reserve= 4 MMSCMD
1 MMTPA of LNG=4 MMSCMD
1 MT of LNG=1300 SCM
GCV=1000kcal/scm
NCV=90%of GCV
1 mmbtu=25.2 smd
1 kilolitre=6.2898 Barrels
1kilocaloric(kcal)=4.187kj=3.968btu
1kilojoule(kj)=0.239kcal=0.948 btu
1 btu(british thermal unit)=0.252kcal=1.055kj
Gas required for 1 MW of power Generation=4500 scmd
Power generation from 1 mmscmd gas=220 MU
Where,
SCMD: Standard Cubic meters per day
MMBTU: Million Metric British Thermal unit
Mmbtpa=million metric british thermal per annum
GCV=Gross Calorific Value
NCV= Net Calorific Value
Mu=metric units
Scm=standard cubic meter
MTOE= million ton of oil equivalent
Demand Projections By Various Agencies for Natural

Gas
Energy and Tourism, with assistance from BHP Billiton Petroleum
Pty Ltd and Santos Ltd. to find out the prospects for LNG imports
found the following demand and supply gap for India:-
Potential gas demand and supply balance – India

References
Books
 Gail infraline-2006
 Encyclopedia of petroleum
Reports
 Credit Rating Information Services of India Limited(CRISIL Research)
 Marketing & development Research Associates(MDRA)
 Eleventh five year plan report
 GAIL annual report-2007-08
Websites
 www.gailonline.com
 www.mopng.com
 www.powerin.nic.in
 www.petroleum.nic.in
 www.teriin.org
 www.iea.org
 www.bp.com
 www.google.co.in
 www.wikipedia.com

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Emergence of Natural Gas in India

I express my sincere gratitude to my industry guide Mr. LOKESH GAIROLA, Chief

1. Intensification of domestic E&P activities.

Demand-Supply Gap for Natural Gas

Chapter Content Page no.

• Exploration and production

• LPG and other Liquid hydrocarbons

HISTORY OF THE ORGANISATION

GAIL (India)Ltd.(erstwhile Gas Authority of India Ltd),India’s principal gas

In 1999, GAIL set up northern India’s only petrochemical plant in Pata.

 2800Kms Hazira-Vijaipur Jagdishpur (HVJ) pipeline becomes operational in

 LPG phase-I plant at Vijaipur commissioned in February 1991.

 Phase-2 at LPG Vijaipur plant commissioned in Feb 1992.

 LPG project at Vaghodia commissioned in Feb 1003

 Joint venture Agreement signed with British Gas on December 6,

 Government of India grants Navratna status to Gail, herby entrusting greater

 GAIL participates in NELP bidding by submitting offer for 7 blocks in

 The gas processing complex, Gandhar begins production in March 2001.The

 GAIL picks up 12% equity in GSEG’s 156 MW power project in Gujarat as a

 Marketing functions is restructured and decentralize at zonal levels.

 GAILTEL phase-I commissioned, creating an OFC based DWDM network

 GAIL successfully secures participation in 2 retail gas companies in Egypt,

 Bhagyanagar Gas Limited, a joint venture of GAIL and HPCL, incorporated in

 Phase I and II of 8000 km network GAILTEL projects connecting Delhi, Mumbai

 Incorporation of GAIL Global Singapore PVT.LTD

 Acquisition of 15 % equity stake in Natural Gas, Egypt.

 De-bottlenecking of LLDPE swing unit from 150000 MT to 210000 MT at GAIL

 Commissioning of South Gujarat pipeline network.

 Commissioning of Vizag-Secundrabad LPG pipeline.

 GAIL gets Golden Icon award for e-governance

 Inauguration of the National gas management centre (NGMC) of GAIL at

 Mechanical completion of new HDPE (High Density Polyethylene) plant with a

 Commissioning of Dahaj-Panvel pipeline

 Brahmaputra cracker and polymer Limited-Joint venture company led by GAIL,

 GAIL acquires stake in A7 Myanmar block

 GAIL’s Vijaipur- Kota pipeline commissioned

 GAIL’s Kailaras- Malanpur pipeline commissioned

 GAIL’s consortium wins 3 CBM blocks in #rd round of bidding

 GAIL HPCL joint venture-Avantika gas limited incorporated

 GAIL ONGC ink gas supply agreement

• Construction of 600 Kms of pipeline

• Expanding its petrochemical capacity at Pata plant from 310000 to 410000

• In consortium with several national and international companies GAIL

• Gailtel achieved the profit of 0.97cr

• Transmission of gas to Godavari from Krishna as done by the agreement between

• MOU with Reliance for joint cooperation in petrochemicals

• Expansion of PATA plant

• Joint venture with China(China gas global energy)

• MOU with ITERAoil and gas company of Russia

• Joint venture for city gas projects in Rajasthan(GAIL AND HPLL)

• City gas distribution in West Bengal(GAIL and Indian oil)

Subsidiaries GAIL Gas Limited

GAIL Global (Singapore) Pte. Limited

Brahmaputra Cracker and Polymer Limited

Aavantika Gas Limited (AGL):

Bhagyanagar Gas Limited (BGL):

Central U.P. Gas Limited (CUGL):

Green Gas Limited (GGL):

Indraprastha Gas Limited (IGL):

Maharashtra Natural Gas Limited (MNGL):

Petronet LNG Limited (PLL):

Ratnagiri Gas and Power Private Limited (RGPPL):