MAYANK SHARMA & Team School of Petroleum Management,PDPU INDIA

Natural Gas«..basics 

It is a colorless, odorless gas that burns with a pale, slightly luminous flame. It is the cleanest burning fuel. It is composed of : Methane (CH4)  Lower chain of hydrocarbons (ethane, propane,

butane etc.)  CO2 (acid gas)  Hydrogen Sulphide (H2S) (Sour Gas)  Nitrogen  Helium etc.

Sources of Natural Gas 

Onshore Fields Offshore Fields Coal Bed Methane Coal Gasification Shale Gas Gas Hydrates


Exploration Natural Gas

Distillation of Crude Oil Petroleum Gas LPG

Industrial NG Power, Fertilizer, Petrochemical, Steel

CNG Automobile

PNG Household, Commercial


Household, Auto LPG



under the Petroleum and Natural Gas Regulatory Board Act 2006.10.City Gas Distribution«. It provides the legal framework for the development of the natural gas pipelines and city or local gas distribution networks. Ministry of Petroleum & Natural Gas established PNGRB with effect from 01.2007. GAIL.. Pilot projects launched in Delhi & Mumbai through JVs of GAIL with IGL & MGL. .The pioneer of city gas distribution in India.initials € € € € € In late 1990s Apex Courts mandated CNG concept in Delhi to control pollution.

PNG Supply System .

Network Pressure High PressureSteel Pipeline MAOP Class 150 # : 19 Kg/Cm2 Class 300 # : 49 Kg/Cm2 Medium Pressure.PE Pipeline PE 80 / PE 100 Pressure Range 4 Bar Low PressureGI & Copper 75 Mbar & 21 Mbar .

PNG Transportation And Distribution System .


Spain. The emerging CGD markets since 19 65 to 2007 has been Argentina . Pakistan. Bangladesh. The key market drivers for CGD in the world are the growth the ROI in India being around 20 % globally around 13 . India. ‡ ‡ ‡ ‡ .20 %. Despite the economic crisis a robust growth has been shown in CGD markets in Argentina and Brazil. The total share of CNG in India is around 4 % compared to other developing countries like brazil which has a share of 14 %. Egypt. UAE. Brazil .Global scenario ‡ The current scenario in India is CGD has a growth rate of about 8 percent every year which comprises of around 9 % of the gas industry in India compared to the 24 % growth rate in the world.

€ The infrastructure lay out especially in pipelines has resulted in the growth in CGD globally. Consumption in emerging markets has grown enormously over last 30 years Key factors impacting LDC growth & size. For PNG from 150 cities to 200 cities with investment of 12-13 billion $ in the next 5 ± 15 years. The CGD caters to the industrial household and commercial markets around the world. In industries globally. € € € € € € € . The CGD in house holds mainly used for cooking and heating in developed markets of western Europe. high dependence especially steel and power on gas demand compared to other fuels like oil and crude. However the rise in India in the use of CNG can be observed with 35 retail outlets and 700000 vehicles running on CNG at present. 2000 kms of pipeline infrastructure getting laid especially for household supply.

South Korea . Western Europe COUNTRIES . China . Peru .€ NASCENT MARKETS Market structure globally ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Project focus Integrated monopoly Initial focus on associated gas replacing oil products Focus on economies of scale Market development Long-term contracts Exclusive supply & transportation rights for distributors Focus on efficiency & prices Increasing number of players Choice for Customers Access to transmission and distribution ‡ Focus on promoting competition ‡ Gas-on-gas competition ‡ Governing traded markets ‡ Deregulation of prices in competitive sectors COUNTRIES ± Vietnam . UAE GROWING MARKETS COUNTRIES ± India . Oman . Egypt .UK USA MATURE MARKETS . Brazil DEVELOPED MARKETS ‡ ‡ ‡ ‡ COUNTRIES .Japan .

Imports LNG.40 emerging. Several Importing LNG and pipeline gas.6 .42 gas consumed Spain 1. 1 transporter and several regional LDCs.€ Status of the gas industry (1977-2007) Countries (Bcma) € Gas Consumption Argentina 10. 5.6 . Imports India 1.43 by pipeline and 1 integrated transporter and distributor.91 producers and suppliers. France 22 . 2 T&D companies. Imports most in country Several regional transporters and distributors.3 main transporters. € 1 integrated transporter and distributor.35 of gas consumed UAE 3. Importing LNG Gas shortage.44 Brasil 0.6 . Gas shortage. 2 regional transporters and several producers. several producers large latent demand. One de facto transporter and represents 50% of consumption € € 3 LDCs.4 .4 . Looking for ‡ € UK 40 .7 ± 31 9 regional LDCs. Several producers.22 supplier. l Pakistan imports. Importing small volumes 25regional LDCs. € € . Imports most of in country.

franchise should encompass industries for a limited period residential demand is too low € Frequently gas transporter competes with LDC and cherry picks consumers € Regulation should allow for liberalisation within defined timeframe Accelerated network expansion € Private companies provide capital injection to build up distribution system € Permitting and procurement procedures can become bottlenecks Tariffs remunerate investment € Adequate rate of return on capital (13-20%) € Pass-through gas costs vs. bundled prices Subsidies to low income customers still an issue .Gas supply availability € Firm supplies available € ToP obligations speed LDC actions € Gas prices competitive to other fuels € Environmental policies towards clean fuels Franchise exclusivity € In warm climates.

Historical Development of CGD in India 15 .

Kanpur. Digboy. IDFC. etc.Company Description Operating City Vijayawada. Tripura Industrial Development Corporation & Agartala Gas Company JV between GAIL and BPCL JV between GAIL and IOC JV between GAIL and HPCL Subsidiary of RIL Government of Assam Undertaking Duliajan. Sivasagar etc. BG and GoM Ahmedabad Mumbai and suburb Agartala TNGCL CUGL GGL AGL RGCL Tripura Natural Gas Company Limited Central UP Gas Limited Green Gas Limited Avantika Gas Limited Reliance Gas Corporation Limited Assam Gas Company Limited Maharashtra Natural Gas Limited JV between GAIL. Bharuch. Naharkatia. Gwalior and Ujjain AGCL MNGL JV between GAIL. Hyderabad BGL IGL GGCL GSPC Gas GAEL MGL Bhagyanagar Gas Limited Indraprastha Gas Limited Gujarat Gas Company Limited Gujarat State Petroleum Corporation Gas Gujarat Adani Energy Limited Mahanagar Gas Limited JV between GAIL & HPCL. BPCL. Agra Indore. GAIL & BPCL Surat. Bareilly Lucknow. Ankleshwar. Murbi. Moran. Tinsukia.Axis Bank and GoM Pune . ILFS. Gujarat Govt Adani Gas JV between GAIL. Dibrugarh. etc. British Gas Rajkot. Aug 2003 Delhi & suburbs JV between Delhi Government. Nazira.


Figures Natural Gas Consumption in mmscmd .

Gas availability in India is expected to spur with several domestic sources commencing production` Gas available in India (2010-12) Estimated Gas supply (2010-12) in mmscmd RAJASTHAN ASSAM 2010 2012 CBM CAMBAY DAHEJ HAZIRA SOUTH BASSEIN TRIPURA  New domestic gas discoveries in KG basin are expected to spur domestic supply  Existing LNG terminals in India are currently undergoing capacity expansion furthering the LNG capacity in the country  New CBM finds shall also augment the natural gas supply KG CAUVERY .

With impetus from the Government. the City Gas Distribution segment is poised for strong growth in the near future throwing immense opportunities CGD coverage expected to increase to over 200 cities by 2025  Increase in domestic gas supplies would reduce supply constraints  Regulatory and policy initiatives to drive growth of city gas distribution networks  Greater sensitivity (government / social) to environmental issues  Superior cost economics for Natural Gas with respect to alternate fuels  Increased mechanisms for gas consumption ± CNG vehicles. appliances etc. .

€ . € It regulates both onshore and offshore upstream activities. Transport . Production & Refining of petroleum € Provides guidelines for the oilfields and development of mineral and oil resources.Regulatory Agency Oil Industry Development Board. € Oil Coordination committee.Storage. € Gas Linkage Committee Functions € Guidelines for Import.

Regulatory Scenario Till 2000 Indian Petroleum Act.1948 ‡ No regulation for down stream activities ‡ Does not provide explicitly for framework for down stream petroleum and natural gas. Petroleum Rules. 1934 ‡ No clear guidelines for Natural Gas Oil Field Act. 1976 .

Petroleum products and Natural Gas . -Refining Common Down stream regulatory Board bill . 2006 -Processing -Storage -Transportation -Distribution -Marketing -Sales of Petroleum.2002 The Petroleum & Natural Gas Regulatory Board. June 2001.New Legislations that changed the face Salient Features National Gas Regulatory Board Ordinance.

‡ Encourage Investment in transmission segment of Natural Gas ‡ Facilitate dispute resolution Functions Register Entities ‡ Market notify petroleum products and natural gas. operate gas distribution network. ‡ Establish LNG Terminal. ‡ Ensure Availability of Gas Punishment ‡ Operating without registration ‡Continuing Contravention .Petroleum & Natural Gas Regulatory Board( PNGRB) Objectives ‡ Protest Consumer Interest by Ensuring Transparent Pricing Mechanism ‡ Promote Competitive market ‡ Enhance efficiency. build. ‡ Establish storage facilities Powers Jurisdiction ‡ Retail & Marketing service obligation ‡ Display of retail price Dispute Resolution ‡ Filing a complaint within 60 days of Misconduct ‡ Decision within 30 days of filing a complaint Authorize Entities ‡ Lay. ‡ Regulate & Access contract carrier to as per the pipeline access code. ‡ Declare Pipelines as contract carrier.

€ Structure of the Industry € Form of Access to Pipeline Infrastructure.Issues Jurisdiction of Centre v/s State € Form of Regulation. € Transmission Tariff € .

The Natural Gas market in India is influenced by two key factors at present 1 Gas Availability Various Natural Gas sources production coming online More Natural Gas source finds in near future 2 Infrastructure for gas transport  Pipeline transmission network ± trunk lines  Local pipeline networks New domestic supplies are expected to fuel significant growth in Natural Gas consumption in India .Robust growth expected in all gas consuming sectors .

CGD .Marketing Main Application ‡ ‡ ‡ ‡ Domestic CNG Commercial Industrial Market Scenario ‡ Marketing Exclusivity ‡ Limited Market ‡ Monopoly Market Nature ‡ B2B ‡ B2C .

Objectives € To identify new customers and educate them benefits of Piped Natural Gas. To explore new customers in industrial and commercial segments in the region by marketing research activities. € .

Marketing Research Initiatives Marketing Research Existing Isolated Potential Area Major Industrial Hubs Cluster of Major & Mini Industrial Estates Interaction with Probable Customers One 2 One Industrial Association Demand Assessment Segment wise Demand Categories of I & C Customers .

Strategy for Customer Acquisition Scope Clarity € Payback Calculation € Advantages of PNG € Alternative Fuel Parity € .

IGL financial review .





3. ‡ ‡ ‡ . 4. by Regulator & by CGD operators 2. ‡ Cheaper fuel / competitive prices by multi operators Easy availability anywhere Foolproof safety everywhere Expectations are to be met by the Government. commensurate to wide public demand Developing safety standards CGD specific and developing & multiply their monitoring by the third party Developing & multiplying core competence of skilled manpower to handle the operations in cities after cities Meeting public expectations. Need of creating vast CGD network with accelerated pace.Challenges in CGD Business 1.

Challenges in CGD Business 5. Proper understanding of regulatory act & mechanism to avoid contradictions for synergy with the objectives: ‡ Logical clarity in the regulations to manage contradictions for winwin situation Common understanding of the act to be read as a whole to make it effective & workable for the public good Natural justice appear to prevail for comparing equals with equals and not with un-equals Too much control not to dampen the spirit of free competition ‡ ‡ ‡ .

Challenges in CGD Business 6. which are not gas producer or marketer Gas purchase pricing for CGD at affordable price for public good Single window clearance from various statutory bodies Sharing of resources like equipment. ‡ Regulatory systems to have: Gas availability / allocation to all CGD entities. inventories at reasonable prices Pipeline connectivity from pipeline infrastructure provider ‡ ‡ ‡ ‡ .

so also by the existing proven track record CGD companies for meeting public expectations fast But abuse of monopolistic attitude is bad for which regulator is empowered to control & check ‡ . Prioritization of what is expected of CGD: ‡ 8. even limited monopoly of entity for a limited period may not be bad. CNG ± PNG ± Industrial segments Regulatory controls looked to be facilitator of expansion: ‡ Keeping public good in view.Challenges in CGD Business 7.

plus in next 5-15 years Gas demand anticipated ± 30 to 40 mmscmd Approx.Opportunities in CGD Business 1. 5.000 Cr. More than 200 cities may be implemented with CGD Projects with investments of Rs. 20. 3.000 direct jobs & more than lakhs of indirect jobs Developing CNG corridors along with national highways Growth to national exchequer by high revenue earning. 20. 4. attractive returns to investors and less expensive & clean fuel to the public 2. .

. Households. Project Management.Opportunities in CGD Business 1. Compression & Dispensing Equipments. CNG Cylinder manufacturers/ suppliers. Government/ Exchequer Statutory Authorities/ Civic Bodies Financial Stakeholders/ Investors      . plumbing.. tubing contractors«. Equipment Manufacturers: Pipelines. Network Design«. CNG station construction. Users: NGV users. CNG Kit Suppliers. Various Stakeholders in CGD Business:     Gas Suppliers CGD infrastructure developing entities/ operators Consultants: Feasibility Report. Commercial corporations.. Industrial users«. Fittings.. NGV Manufacturers Contractors: Pipeline execution. Basic Engg.

Recommendations Proper gas pricing formula € Importance to infrastructure € Policies to attract foreign investment & technology € Separate board for upstream & downstream € Simplified procedure for merger with foreign companies € .

Role of a Manager Directing the project team to ensure that their responsibilities to attain objectives of organization for execution of respective project. Coordinate project assignment. Monitor the various assignments being executed under Project department. Consulting assignments are met as per planned targets keeping in view long term and short term plan. feasibility of project. . Initiate programs that need to improve quality and overall efficiency of the department with respect to execution of various project assignments. Co-ordinate with Engineering Department for project execution. Carryout studies for site selection. plant layout. Be fully involved in the elaboration of various reports and documents. Review and evaluate contracts and acquisition related to technical matters Formulation of project /departmental budgets. Analyze and appraise regularly and systematically the effectiveness of all technical aspects for execution of projects and ensure regular compliance of all obligations as per project requirement.

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