c

c 

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 Range

(mole %) (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 37.8 36.0 - 40.2

(MJ/m3 ), dry basis *
* 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.

   


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 total 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.


 
‡ 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.

 
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.


  c  

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 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 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

%& #'()#*#' ' +#*#""! $
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.

, ' "!' &""! $
‡ 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

-# - $ 
‡ 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 .


+c"   )#*  c # $

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.


   &

. )  " )

Delhi Delhi
UP Noida
IGL
Greater Noida
Ghaziabad
Mumbai
Thane
Maharastra Mira-Bhayandar MGL
Navi Mumbai
Pune
Kanpur
CUGL
Bareilly
Uttar Pradesh
Lucknow
GGL
Agra
Gujarat Vadodara GAIL
Vijaywada
Andhra Pradesh Hyderabad BGL
Rajahmundery
Tripura Agartala TNGCL
Dewas GAIL Gas
Madhya Pradesh
Indore AGL
Haryana Sonepat GAIL Gas


   &

. )  " )

Delhi Delhi
UP Noida
IGL
Greater Noida
Ghaziabad
Mumbai
Thane
MGL
Maharastra Mira-Bhayandar
Navi Mumbai
Pune MNGL
Uttar Pradesh Kanpur
CUGL
Bareilly
Tripura Agartala TNGCL
Dewas GAIL Gas
Madhya Pradesh
Indore
AGL
Ujaain
Haryana Sonepat
Maharastra Panvel GAIL Gas
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 /)
0 .!!   and ; and has acquired a stake in    ( !#  to pursue
CNG opportunities in mainland China. GAIL plans to develop City Gas markets worldwide
in collaboration with global oil and gas majors.


c.
/ 
1c +.

c #

÷? 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

2 !3   !

+ 

÷? 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

+

÷? Malaysia LNG, Tanjung Kidurong, Bintulu, Malaysia

÷? Brunei LNG, Lumut, Brunei
÷? Arun, Indonesia
÷? Bontang, Indonesia
÷? Tangguh, Indonesia
÷? Oman LNG
÷? 'atar gas, 'atar
÷? Ras Laffan, 'atar, see on a map
÷? ADGAS Plant, Das Island, Abu Dhabi, United Arab Emirates
÷? Rasgas, 'atar
÷? Yemen LNG(Total),Balhaf, Yemen
 ÷? Sakhalin LNG, Sakhalin, Russia - (Sakhalin Energy Investment Company Ltd.)

+ 

÷? Atlantic LNG, Trinidad and Tobago

÷? Kenai LNG, Nikiski, Alaska



+!

÷? Karratha Gas Plant - North West Shelf Venture operated by Woodside Petroleum in
Karratha, Western Australia
÷? Darwin LNG, operated by ConocoPhillips.

 "

÷? Hammerfest LNG, Snøhvit, Norway

./ +
++.

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 ve hicle. 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.




! "  ) c #
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)

*'" ) 

The major players among above companies are MGL, IGL and GGCL. Their major
achievements in regard to market penetration and infrastructure are as under:

 1 c 
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

).& !#
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.


.""   ) 0 # #
4 c # $
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.


/
/c c c+
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.