City Gas accounts for 15% of natural gas consumption

Dr. Pramod Paliwal, Professor & Chairperson-PGDPMX, School of Petroleum

Management, Pandit Deendayal Petroleum University, on India’s potential in City Gas.
He also touches on the key factors that must be taken into account when building a
transmission and distribution network.

Bryan Camoens: How realistic are joint ventures in the gas distribution space?

Dr. Pramod Paliwal: JV route is a very practical approach towards entering &
developing city gas distribution markets. Besides the fact that as all JVs, the partners
complement each others’ strengths, the JV concept in this business is especially relevant
from international experience point of view. There is empirical evidence from city gas
distribution business in emerging markets where the JVs have not only worked
successfully for the benefit of all the stakeholders, but also have created ample
shareholders’ value in terms of multiplied market capitalization.

Bryan Camoens: What are some of the untapped opportunities in the city gas
market in India?

Dr. Pramod Paliwal: India presents a potential of more than 500 cities/towns having
population of more than 100, 000. Presently only 60 plus cities have either been
connected to the City Gas Distribution or are in advanced stage of connectivity.
Moreover India is one of the fastest growing vehicle markets in the world.

Bryan Camoens: Could you please give us a brief analysis and assessment of the city
gas distribution network in India?

Dr. Pramod Paliwal: Apart from the information given above about Indian City Gas
Distribution industry, India has embarked on the path of creating long-distance gas
transmission network connecting the length & breadth of the country. This coupled with
commercialization of the recent offshore natural gas discoveries in the Krishna-Godavari
basin of India {which has added to more than 60 Million Metric Standard Cubic Meters
per Day (MMSCMD) of supplies to the Indian natural gas user industry-including city
gas distribution sector} is a pointer towards a thriving city gas distribution sector in India.

With the setting up of the Petroleum & Natural Gas Regulatory Board (PNGRB) India
has now a stabilized regulatory regime in place that works towards the development of a
balanced & sustainable city gas distribution sector in the country. India currently has a
consumption of close to 170 MMSCMD of natural gas. City gas accounts for
approximately 12-15% of this; and thus that too presents a tremendous potential in terms
of market growth. Moreover India has LNG terminals located at strategic locations to not
only take advantage of growing trade movements in international LNG space but also to
reinforce its natural gas supply security. The city gas distribution sector in India is
incidentally also free from any kind of legacy effects and hence this also contributes
towards the development of this sector in the most competitive and sustainable manner.
Bryan Camoens: When it comes to building the transmission and distribution
network, what key factors must be taken into account?

Dr. Pramod Paliwal: Though it may be a long drawn discussion, but to put it in a
nutshell:

a) Health, Safety & Environmental aspects should come at the top of the agenda.
b) Networks need to benchmark with best technical standards available in the world.
c) The network economics should ensure redundancy and hence duplication of
infrastructure needs to be avoided. At the same time the networks should be available to
all the interested players concerned with the facility of accessing the network as a
common carrier to the sector.
d) Timely approvals from concerned authorities, including Right of Way (RoU) and
Right of Use (RoU) are necessary to avoid any time & cost overruns.
e) The challenges to create networks in congested city areas have to be met.
f) A lot remains to be desired in terms of manning the city gas distribution networks
with qualified & skilled manpower-in terms of not only project management perspective
but also later maintaining these networks.

Bryan Camoens: What does the future of natural gas hold in India?

Dr. Pramod Paliwal: With the country’s alignment with international concerns about
using clean & green fuels, and all the necessary enablers in place, natural gas holds an
exciting future for all the players in the natural gas value chain-including the downstream,
distribution part.
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Dr. Pramod Paliwal will be speaking at the City Gas Asia Summit. For more details on
the summit please visit www.citygasasia.com or drop an email to enquiry@iqpc.com.sg