INTRODUCTION

One may consider Natural Gas a very uninteresting gas – it is colourless, shapeless and

odourless in its pure form. But it has huge energy producing potential when burnt. A typical

composition table is shown below:

Component Typical Analysis (mole %)

Range (mole %)

Methane 95.2 87.0 - 96.0

Ethane 2.5 1.5 - 5.1

Propane 0.2 0.1 - 1.5

iso – Butane 0.03 0.01 - 0.3

normal – Butane 0.03 0.01 - 0.3

iso – Pentane 0.01 trace - 0.14

normal – Pentane 0.01 trace - 0.04

Hexanes plus 0.01 trace - 0.06

Nitrogen 1.3 0.7 - 5.6

Carbon Dioxide 0.7 0.1 - 1.0

Oxygen 0.02 0.01 - 0.1

Hydrogen trace trace - 0.02

 

Specific Gravity 0.58 0.57 - 0.62

Gross Heating Value (MJ/m3), dry basis *

37.8 36.0 - 40.2

* The gross heating value is the total heat obtained by complete combustion at constant

pressure of a unit volume of gas in air, including the heat released by condensing the water

vapour in the combustion products (gas, air, and combustion products taken at standard

temperature and pressure).

Natural Gas can be produced from fossil Natural Gas reserves (oil fields, gas fields & coal

fields), biogas and gas hydrates. A wide use of Natural Gas has made it a very important

commodity in the energy market. Natural Gas is used in power generation, domestic fuel,

transportation fuel, fertilizer, aviation, hydrogen production and petrochemicals.

As on date natural gas has not yet acquired a significant position in the Indian Energy Basket.

As per the present situation natural gas consumption is 8% while the consumption of crude

oil is nearly four times (31%) of it. A lot of capital deficit is being faced by the Government

Exchequing as 70% of the crude oil demand is met with imports. As per the Government of

India Hydrocarbon vision 2025’ there would be a lot of development in improving the natural

gas infrastructure in the country.

So far natural gas market has evolved very slowly with estimated just 0.5% of the world’s

total natural gas reserves. The production of natural gas in 1976 from Bombay High, western

coast has changed the situation dramatically in the past as far as Indian Gas market is

concerned. This was soon followed by the South Bassein free gas field in 1978. The major

consumers of this gas were the power and fertilizer sectors and gas being transmitted by

Hazira-Bijaypur-Jagdishpur (HBJ) cross country pipeline.

Government approved New Exploration License Provider (NELP) in 1997 to allow the

participation of foreign companies in production and also approved the PNGRB Act in 2007

for the structured marketing of natural gas. Under NELP the natural gas find in KG basin was

the largest gas find in 2002. The gas production of KG basin is likely to touch 80 mmscmd in

its full stream bring oxygen to the fuel starved existing power and fertilizer sector.

LNG has also been a major focus from the government. So far India has only 7.5 MMTPA

capacity with only two LNG terminals operational. There also has been an attempt to import

gas through pipelines from Iran, Myanmar and Bangladesh. From Iran it was the IPI pipeline.

IPI talks were almost nearing its conclusion regarding of the gas pricing before the political

conflict seems to put it into a permanent halt. On the other hand GAIL failed to gain the

victory in the bidding process in Myanmar for LNG and no forwards of the pipeline also

seems to be in the news.

But so far it seems the Indian natural gas potential is such that the country not only needs any

import of gas but in the due future it will start exporting gas in LNG based upon the demand

and supply scenario of energy starving nations at a reasonable price.

At the end of NELP VII rounds there has been 206 contracts signed and 8 hydrocarbon

discoveries are made. Under NELP VIII 70 blocks are offered. And CBM IV too underway

with 10 blocks being offered. The last date for the bid acceptance is 10th of August’09.

Government’s initiatives

The Government approved NELP in 1997 to attract risk capital and technologies in the E&P

sector. The NELP Policy also emphasized on providing freedom to market oil and gas in the

country at market related prices. So far a total206 contracts signed under seven rounds of

NELP and 68 hydrocarbon discoveries made so far under NELP. In NELP VIII (under bid

acceptance process) there are 70 blocks offered and under four categories. Type-S (10

blocks), 8 on land, 24 deepwater blocks and 28 shallow water blocks.

Large gas discoveries were made on East Coast ( World's largest gas discovery in 2002).Two

gas discoveries by RIL in D-6 KG deepwater block are almost developed and production has

started in March 2009.

NELP Regime

• Involves upfront commitment of risk money by Contractor without any liability on

the Government..

• It ensured full exploration/Development cost recoverable in event of discovery

• Cost Recovery limit & Profit petroleum sharing split are supposed to be negotiated

and became biddable parameters.

• Royalty is first charge on Contractor take.

• GOI Profit petroleum escalates rapidly after full cost recovery. This is determined by

the Investment Multiple (IM) in the PSC (Production sharing contract).

• Hence, financial accrual to Government depend upon discovery size and prices

obtained.

PNGRB

Formation of the Petroleum and Natural Gas Regulatory Board (PNGRB) draft has been the

most encouraging initiative taken by the government for a structured Indian Oil & Gas

market.

Its objective is to regulate refining,processing,storage,transportation,distribution,marketing

and sale of petroleum,petroleum products and natural gas excluding production of crude oil

and natural gas so as to protect the interest of consumers and entities engaged in specified

activities and to ensure uninterrupted and adequate supply and to promote a competitive

markets.

The Growth of Gas Infrastructure

With the increasing development of the new gas fields there has been a considerable

expansion of natural gas pipelines across several parts of the country.The existing are about

6300km mainly operated by GAIL .The planned are around 8400 kms integrated network to

link any source o any market.

Reliance proposed Gas pipeline:

• Reliance has set up a Special Purpose Vehicle, Reliance Gas Transportation Infrastructure

Company Limited (RGTIL) to build, own, operate and transfer pipelines and terminals for

marketing and distribution of natural gas.

• RGTIL approached the Ministry of petroleum and natural gas for issuance of notifications

for Kakinada-Hyderabad-Uran-Ahmedabad gas pipeline projects originating from Jamnagar

to connect the proposed regasification terminal at Jamnagar RIL’s block in Saurashtra and

Kutch region and east coast blocks (offshore).

• RGTIL proposed the following three pipelines:

Kakinada-Hyderabad-Goa

Jamnagar-Bhopal-Cuttack

Hyderabad-Uran-Ahmedabad

Route and Length of Proposed Pipelines

Route Length (km)

Kakinada-Hyderabad-goa 1121

Jamnagar to Cuttack 1650

Phase-I Jamnagar to Bhopal 828

Phase-II Bhopal to Cuttack 822

Hyderabad – Uran – Ahmadabad pipeline 1079

Table.1

Kakinada-Hyderabad-Goa-Uran Ahmedabad pipeline:

Sources of gas supply to the proposed pipeline are:

• Gas from KG D-6

• Likely gas from adjoining exploration blocks of the Reliance on the Eastern Coast

Gas from blocks on Western coast.

Jamnagar - Bhopal - Cuttack pipeline:

• LNG import at Jamnagar [currently at hold]

• Reliance exploration blocks in Kutch and Saurashtra region

• CBM blocks in Madhya Pradesh

• NEC-25 block offshore in Orissa

Gujarat Gas Grid Project:

• Envisages transporting indigenous natural gas from production centers and LNG from

terminals to demand centers all over Gujarat through a high pressure Trunk Pipeline.

• Total length of the gas pipeline planned is 1200-1500 km. Project shall be implemented in

two phases. Phase I, from Vapi to Vadnagar at an estimated cost of Rs. 12 billion and Phase

II mainly in the Saurashtra region at an estimated cost of Rs. 13 billion .

GAIL is the pioneer of city gas distribution in India:

GAIL took many initiatives to introduce PNG for households and CNG for the transport

sector to address the rising pollution levels. Pilot projects were launched in early 1990s in

two metros Delhi and Mumbai through joint venture companies Indraprastha Gas Limited

(IGL) and Mahanagar Gas Limited (MGL) leading to the start of commercial operation of

city gas projects. The results of these ventures are quite visible through the improvement in

air quality in these cities.

Based on the success of IGL and MGL, GAIL has further set up six more JVCs viz

Bhagyanagar Gas Limited, Andhra Pradesh; Avantika Gas Limited in Madhya Pradesh;

Central U P Gas Limited & Green Gas Limited in Uttar Pradesh; Maharashtra Natural Gas

Limited in Pune Maharashtra and Tripura Natural Gas Company Limited in Tripura for CGD

projects in various cities.

However, Ministry of Petroleum & Natural Gas established the Petroleum and Natural Gas

Regulatory Board (PNGRB) with effect from 01.10.2007, under the Petroleum and Natural

Gas Regulatory Board Act 2006, to regulate the refining, processing, storage, transportation,

distribution, marketing and sale of petroleum, petroleum products and natural gas excluding

production of crude oil and natural gas. The Petroleum & Natural Gas Regulatory Board Act-

2006 provides the legal framework for the development of the natural gas pipelines and city

or local gas distribution networks. With the arrival of the PNGRB the implementation of

PNG in various cities is being taken up in a phased manner as and when the bids are called

for by the Regulator.

In the future as and when the bids are called for the CGD network development by the

PNGRB, interested entities may submit the bids and whoever is successful in the bidding will

be authorized to develop the CGD network consisting of CNG & PNG infrastructure in that

particular city. This has induced other entities to come into CGD projects and thus a

competitive era in this field has been initiated.

In this competitive environment, a sincere and dedicated approach, energy and focus have

been taken to maintain GAIL's leading position in CGD projects. This has necessitated the

requirement of a new establishment of GAIL dedicated to CGD projects. Accordingly, for

implementation of the city gas distribution projects smoothly, a wholly owned subsidiary of

GAIL (India) Limited, GAIL Gas Limited, was incorporated on May 27, 2008 as a limited

company under the Companies Act.

GAIL Gas Limited has been authorized by PNGRB and MoPNG for implementing City Gas

Distribution Projects in Dewas (Madhya Pradesh), Kota (Rajasthan), Sonepat (Haryana),

Meerut (Uttar Pradesh), Firozabad (Uttar Pradesh) and Vadodara (Gujarat).

As per the business plan, GAIL Gas would be expanding the CGD business in dedicated and

aggressive manner and will facilitate re-investing returns from operational CGD projects into

new projects thus reducing the need for fresh equity infusions by GAIL.

As per the estimate more than 200 cities have been identified for the development of CGD

projects in a phased manner in synchronization with the commissioning of the pipeline. The

details of these cities have already been forwarded to MoPNG by GAIL with a request for

authorization for setting up of CGD network in these cities.

Gas supplied by GAIL to retail gas distributors serves more than 6,00,000 automobiles as

Compressed Natural Gas (CNG) and over 6,50,000 households as Piped Natural Gas (PNG).

Various cities are covered in the network.

PNG Network

State City Company

Delhi Delhi

IGLUP Noida

  Greater Noida

  Ghaziabad

Maharastra

Mumbai

MGL

Thane

Mira-Bhayandar

Navi Mumbai

Pune

Uttar Pradesh

Kanpur CUGL

Bareilly

Lucknow GGL

Agra

Gujarat Vadodara GAIL

Andhra Pradesh

Vijaywada

BGLHyderabad

Rajahmundery

Tripura Agartala TNGCL

Madhya PradeshDewas GAIL Gas

Indore AGL

Haryana Sonepat GAIL Gas

CNG Network

State City Company

Delhi Delhi IGL

UP Noida

  Greater Noida

  Ghaziabad

Maharastra

Mumbai

MGLThane

Mira-Bhayandar

Navi Mumbai

Pune MNGL

Uttar Pradesh Kanpur CUGL

  Bareilly

Tripura Agartala TNGCL

Madhya PradeshDewas GAIL Gas

Indore AGL

  Ujaain

Haryana Sonepat

GAIL GasMaharastra Panvel

Gujarat Vadodara

GAIL's City Gas Distribution initiatives are not confined to India. It has established its

presence in the CNG and City Gas arenas in Egypt through equity participation in Fayum

Gas, Shell CNG and Natgas; and has acquired a stake in China Gas Holding to pursue

CNG opportunities in mainland China. GAIL plans to develop City Gas markets worldwide

in collaboration with global oil and gas majors.

LIST OF LNG TERMINALS

India

Dahej Terminal, Petronet LNG Ltd, Gujrat

Hazira Terminal, Hazira LNG Pvt Ltd, Gujarat

Dabhol Terminal, Ratnagiri Power (NTPC) LTD, Maharashtra

Kochi Terminal, Petronet LNG Ltd, Kerala

Existing liquefaction terminals

Africa

Sonatrach plant, Skikda, Algeria

Bethioua, Algeria, see on a map

EG LNG, Malabo, Bioko Island, Equatorial Guinea

SEGAS Damietta LNG EGYPT

ELNG IDCO LNG EGYPT

Nigeria LNG, Bonny Nigeria

Angola LNG

Asia

Malaysia LNG, Tanjung Kidurong, Bintulu, Malaysia

Brunei LNG, Lumut, Brunei

Arun, Indonesia

Bontang, Indonesia

Tangguh, Indonesia

Oman LNG

Qatar gas, Qatar

Ras Laffan, Qatar, see on a map

ADGAS Plant, Das Island, Abu Dhabi, United Arab Emirates

Rasgas, Qatar

Yemen LNG(Total),Balhaf, Yemen

Sakhalin LNG, Sakhalin, Russia - (Sakhalin Energy Investment Company Ltd.)

Americas

Atlantic LNG, Trinidad and Tobago

Kenai LNG, Nikiski, Alaska

Australia

Karratha Gas Plant - North West Shelf Venture operated by Woodside Petroleum in

Karratha, Western Australia

Darwin LNG, operated by ConocoPhillips.

Europe

Hammerfest LNG, Snøhvit, Norway

USE OF NATURAL GAS

With the hydrocarbons finds in India way back in 1889 in upper Assam, the journey for

exploring hydrocarbons reserves continued. There had been Oil & Gas finds in various

regions at various times. The major gas finds of Bombay High and South Basein change

energy consumption pattern in India. Natural gas is most eco friendly fuel among the

hydrocarbons group and next only to solar energy, wind energy, hydel energy and hydrogen.

The Indian Energy Basket has a share of Natural gas touching 9% as against 24% of the

world average.

The most benign use of Natural Gas is in City Gas Application. This sector

comprises of :

i. Domestic household use

ii. Commercial use in hotels, hospitals, restaurant and offices

iii. Transport sector use in three wheelers, buses, trucks and cars

iv. Industrial Sector use in the Small Scale Industry including Power generation.

The Household use of gas has picked up in India especially when multiple use of Natural Gas

in the houses was demonstrated. The gas can be used for cooking, water heating, space

heating, air conditioning, refrigeration, power generation and fuelling the vehicle. The

concept of a single switch solution in the household sector is picking up momentum. This

concept provides that a household could be self contained gas users to meet its all energy

needs at one go that means once the gas supply is switched on, all these services can be

secured which are all gas based of course selectively or need based.

In the commercial sector the city gas has found to be very useful in the application like

cooking, air conditioning, power generation. In fact a concept of Combined Heat & Power

(CHP) is getting popular in India. This system has much higher thermal efficiency as

compared to other conventional services.

The use of Natural gas in the transport sector has contributed to a great extent to contain the

pollution due to vehicular exhaust emissions. Apart from this natural gas as CNG has been

able to replace high priced hydrocarbon commodity like petrol and diesel. This has further

helped India to reduce its Oil Import Bill. As a matter of fact, the international Gas Price is

always 10- 15% less as compared to crude oil price in energy terms.

Natural gas supply to industries in and around a city or local area has considerably helped

reducing pollution in the cities apart from providing ease of operation and fuel handling to

the industries.

Development of City Gas in India

In the early stage, the city gas was only started on experimental basis, primarily to utilize the

locally produced gas. Such locations had been Duliajan, Moran, Nazira, Sibsagar in Assam,

and Baroda in Gujarat. The structured use of Natural Gas in domestic sector in Assam, started

after formation of Assam Gas Company in 1962. In addition, the metros of Mumbai and

Kolkata used Coal Gas for City Gas Usage way back since pre-independence. The coal gas

which is also known as Synthesis Gas did not find a commercial business model and

abandoned in Mumbai way back in 1981. In Kolkata this concept is still working after the

original company the Oriental Gas was succeeded by Greater Calcutta Gas Supply

Corporation in 1987, however it is on the retardation phase.

The development of City Gas in India remained localized for quite long time. It was only in

80’s when structured development of City Gas took place in India. The Gujarat Gas

Company is the example of this initiative when Govt. of India allocated gas for development

of City Gas in Ankleshwar and Bharuch.

In early 90’s Supreme Court on a PIL filed by Sh N.C. Mehta directed that the City Gas

should be implemented in Delhi, Mumbai and Baroda by GAIL (I) Ltd. In pursuant to this

direction, the CNG was introduced in all these three towns in 1993. In Mumbai a JV of

GAIL, BG and Govt. of Maharashtra was formed to pursue City Gas Business. A company

was registered in 1995 as Mahanagar Gas Limited. This company has been performing very

successfully since then.

In Delhi after continuing its activities for 5 years, GAIL formed a JV with Bharat Petroleum

Corp. Ltd. and Govt. of NCT of Delhi and created a new company in 1998 by the name of

Indraprastha Gas Limited.

Subsequently, there have been various initiatives in the City Gas Distribution (CGD)

Projects. As of now, the numbers of companies operating in CGD are as under:

1. Assam Gas Company Ltd, Duliajan, Assam

2. Tripura Natural Gas Company Ltd, Agartala, Tripura

3. Gujarat Gas Company Ltd (GGCL), Surat, Gujarat

4. Baroda Municipal Corporation Ltd, Baroda, Gujarat

5. Charotar Gas Sehkari Mandali Limited

6. Great Eastern Energy Corporation Ltd.

7. Mahanagar Gas Ltd (MGL), Mumbai, Maharashtra

8. Maharashtra Natural Gas Company Ltd, Pune, Maharashtra

9. Indraprastha Gas Ltd (IGL), Delhi

10. Bhagyanagar Gas Ltd, Hyderabad, AP

11. Green Gas Ltd, Lucknow, UP

12. Central UP Gas Ltd, Kanpur, UP

13. Avantika Gas Ltd. MP

14. Gujarat State Petroleum Corporation Ltd, Ahmedabad, Gujarat

15. Adani Energy Ltd, Ahmedabad, Gujarat

16. Sabarmati Gas Ltd, Gandhinagar, Gujarat

17. Kolkata City Gas Co. Kolkata WB

18. Haryana City Gas Limited, Gurgaon, Haryana*

19. Sity Energy Limited, Delhi*

20. Reliance Industries Ltd*

21. Reliance Energy Ltd*

22. Krishna Godavari Gas Ltd (JV of GSPCL & Govt of AP)

*- Operation yet to start

The major players among above companies are MGL, IGL and GGCL. Their major

achievements in regard to market penetration and infrastructure are as under:

Traits MGL IGL GGCL

Domestic Connection 3,17,000 95,000 2,12,000

Vehicle Conversion 1,83,000 1,75,000 58,000

CNG Outlet 127 154 22

Gas Sold (MMSCMD) 1.26 1.55 0.31*

* Total gas marketed is more than 3mmscmd, which include Industrial also

City Gas Stakeholders

There are many other stakeholders in the business of CGD implementation apart from the

entities which develop and own the assets. These are as follows:

i. Gas Suppliers

ii. Manufacturers of Equipments such as compressors, pipes and pipe fittings, metering

equipments, filters, safety devices, CNG kits, CNG Cylinders and Car manufacturers.

iii. Consultants, who prepare feasibility report, develop basic engineering

and network design etc.

iv. Contractors, who execute the project for steel pipe laying, PE pipe laying, CNG

Compressors, filters, pressure reduction unit and metering installation including plumbing of

the household connections.

v. The users which comprise of household, commercial unit, vehicle

owners and industrial units.

Support from statutory authorities, academia and Govt. of India:

The conference has support from the Government of India through Ministry of Petroleum and

Natural Gas Ltd., Petroleum and Natural Gas Regulatory Board, University of Petroleum and

Energy Study, IIT Mumbai, Infraline Energy and Technology Publications through their

participation as speakers, media partner and knowledge partner etc.

FUTURE OF CGD IN INDIA

With the Petroleum and Natural Gas Regulatory Board in position and good prospects of new

gas finds in India the future of CGD Project is expected to see an asymptotic growth. There

are proposals for extending the existing transmission pipe line network from nearly 7000

Kms to more than 10000 Kms in the coming years and subsequently to 15000 plus Kms. An

exercise done by the one of organizing company indicates that around 130 cities/towns are

expected to get city gas project in various stages in next XI – Five Year Plan.

To summarize with, there would be a lot of opportunities in India for all stakeholders

associated with City Gas Distribution Projects. This Eurasian conference cum exhibition is

the first endeavor to bring various stakeholders together for mutual benefits.