2. DECLARATION
I, Subodh Maithani, hereby declare that the project titled “Demand analysis and selection of
city for CGD network establishment on proposed Dadri-Panipat (RLNG) pipeline” is an
original work done during my organization training as component of Masters in Business
Administration (MBA) in Oil & Gas Management of University of Petroleum and Energy
Studies, Dehradun from June 2, 2008 to July 31, 2008 with Indian Oil Corporation Ltd.
Place: Delhi
Date: July 31, 2008 (Subodh Maithani)
Class of 2009
Page II
3. EXECUTIVE SUMMARY
Amidst increasing prices of crude oil and increasing environmental concerns Natural Gas has
been considered as one of the possible solution to the predicament. Many steps have been
taken all around the globe to combat the situation created by diminishing Oil reserves. Cross
border pipelines have now become so fissile and feasible to lay just because of the
seriousness of the existing energy conditions.
In India, several steps have been taken in an order to curb the energy scarcity out of which
introduction of NELP rounds, NGH Programme, CBM exploration programme and
harnessing of renewable sources of energy are commendable. Similarly, on the front of
downstream operations steps have been taken for making easy availability of natural gas to
the common people. The study on demand analysis and selection of city for CGD network
establishment on proposed Dadri-Panipat (RLNG) pipeline also covers on e of the major
portion of the City gas Distribution laying process.
The study covers the current scenario of Oil and Gas industry with a brief introduction to the
sources and existing statistical figures of Crude Oil and Natural Gas. It also covers the CGD
structure in detail and provides an easy access to the CGD network processing.
The study encapsulate the rationale and current status of proposed RLNG pipeline of IOCL
and carry out SWOT analysis of the organization regarding the City Gas Distribution network
establishment. It also calculates the potential demand of Natural Gas in probable areas and
cities.
The study proposes few suggestions regarding the marketing of Natural Gas and comes out
with a conclusion about the city selection for establishment of CGD network on the basis of
demand figures and some external factors.
Page iii
4. ACKNOWLEDGEMENT
The summer training at Indian Oil Corporation Ltd. (IOCL) had been a great exposure and
learning for me of working in a professional corporate environment. I take this opportunity to
express my gratitude to Mr. Manish Grover, Sr. Manager (BD-Gas Marketing), IOCL for
providing me this opportunity to undertake this study assignment “Demand analysis and
selection of city for CGD network establishment on proposed Dadri-Panipat (RLNG)
pipeline”.
Though the subject was difficult, but with the dedicated support and guidance from Mr.
Manish Grover, IOCL helped me in delivering the best.
I would also like to thank Mr. Alok Kumar Roy, Dy. Manager (BD- Gas), IOCL, my
reporting officer, for his continuous guidance and motivation all through the study.
There are many people who have contributed to the success of my study, I would like to
acknowledge my sincere thanks to ICICI officials especially to Mr. Pankaj Mathur, Mr.
Aqueel Ahmad, Ms. Seema Dikshit Venkatesh, Mr. Suman Kumar Mishra. Mr. Rajendra
Sharma, Mr. Kuldeep Verma, Mr. Navneet, Mr. Jayant and Mr. Praveen Kumar for providing
their valuable inputs and time.
I am also thankful to Mr. Indra Prakash, Chief Marketing Manager, Green Gas Ltd. I am
indebted to University of Petroleum and Energy Studies (UPES), Dehradun for providing me
an opportunity to work on this study.
Last but not least, I thank my family and friends for their moral support.
Page iv
6. LIST OF FIGURES
Figure 1. LNG Supply Chain ..................................................................................................... 6
Figure 2. Interstate Gas Grid Envisaged by GAIL .................................................................... 7
Figure 3. Proposed route for IPI and TAPI pipelines ................................................................ 9
Figure 4. Distribution of Organic Carbon in Earth reservoirs to total Organic Carbon(18776.6
Gigaton ..................................................................................................................................... 10
Figure 5. Indian Gas Chain ..................................................................................................... 12
Figure 6. Segment size and profitability ................................................................................. 14
Figure 7. Process description of CNG network ...................................................................... 16
Figure 8. CNG process network............................................................................................... 19
Figure 9. Haryana..................................................................................................................... 29
Figure 10. District map of Panipat ........................................................................................... 30
Figure 11.Estimated industrial demand distribution of NG for Panipat district ..................... 31
Figure 12. Estimated Industrial demand Distribution of NG in Sonepat District ................... 33
Figure 13. Estimated Industrial demand distribution of NG in Baghpat district in year 2012-
13.............................................................................................................................................. 36
Figure 14.Estimated industrial demand distribution of NG for Meerut district ...................... 39
Figure 15. .Estimated industrial demand distribution of NG for Ghaziabad district .............. 41
Figure16.Estimated industrial demand distribution of NG for G.B. Nagar district ................ 43
Figure 17. Estimated industrial demand distribution of NG in Bulandshahr district ............. 44
Figure 18. Procedure for cancellation of exclusivity ............................................................... 57
Page vi
7. CHAPTER 1
1.1 INRODUCTION
The study titled “Demand analysis and selection of city for CGD network establishment
on proposed Dadri-Panipat (RLNG) pipeline” was intended to zero potential areas for
Indian Oil Corp. Ltd. in the possible and prolific state of Haryana and Uttar Pradesh and
finding out the best possible way to implement the CGD network. The study also provides an
insight on the selection procedure of a District/City for the establishment of CGD network on
a proposed pipeline and the rationale behind the selection. Promoting increasing and
extensive consumption of Natural Gas in Indian cities, the study provides a profitable channel
to the company to achieve desired goals with the fulfillment of its social commitment towards
the citizens of the state itself.
1.2 OBJECTIVES
The objective of this study can be stated as:
• To elaborate the CGD network establishment process;
• To analyze the sales potential in different parts of state of Haryana and Uttar Pradesh
along the Dadri-Panipat pipeline;
• To establish a study coherent to the existing work in an order to strategically
implement the CGD network in the prolific state;
• To provide an insight into the selection criteria of the city/district for CGD
establishment and;
• Suggesting some of the possible methods to be considered while making of the
implementation strategy.
1.3 METHODOLOGY
The study was a desk based research. Information on various aspects related to demand for
Natural Gas was collected through various reliable sources. Data regarding the existing
demand from IOCL senior decision makers is collected via e-mails and personal contact.
Though, due to non-disclosure policy of the organization not much of the information was
made available.
1.4 STRUCTURE OF THE REPORT
Chapter 2 introduces Natural Gas (NG) as a fuel of future in terms of its available resources
and benefits associated with it.
Chapter 3 gives an overview of the city gas distribution network with appropriate examples
Chapter 4 talks about the Indian Oil Corp. Ltd and its interest in CGD network establishment.
It also include SWOT analysis of IOC in terms of CGD network.
Page 1
8. Chapter 5 briefly introduces Dadri-Panipat RLNG pipeline project and covers the rationale
and current status of pipeline laying process.
Chapter 6 covers the state of Haryana and two of its districts in order to ascertain the demand
of natural gas in those districts, covering Industrial, CNG and PNG demand.
Chapter 7 talks about Uttar Pradesh (UP) as one of the option available to the IOC Ltd. for
CGD network establishment and calculates the estimated NG demand for 6 cities.
Chapter 8 deals with the regulations laid down by PNGRB board, mandatory to any entity
interested in laying pipeline.
Chapter 9 comes out with conclusion and key learnings from the study.
Page 2
9. CHAPTER 2: NATURAL GAS
2.1 INTRODUCTION
Natural gas is a mixture of hydrocarbon gases and is a colorless, odorless fuel, environment
friendly energy source, which burns cleaner than many other traditional fossil fuels. It is
highly flammable hydrocarbon gas chiefly consisting methane CH4 and on the basis of the
concentration of methane it is also termed as Dry and Wet gas. In addition to it natural gas
may also include other gases such as oxygen, nitrogen, hydrogen, ethane, ethylene, propane
and even some helium. As far as its occurrence is concerned it occurs deep below the surface
of the earth in three principal forms- associated gas, non-associated gas and gas condensate.
Associated gas is found in crude oil reservoirs, either dissolved in the crude oil or in
conjunction with the crude oil deposits while Non-Associated gas occurs in reservoirs
separate from crude oil wells. It is also termed as dry gas. Gas Condensate is the hydrocarbon
liquid dissolved in saturated natural gas that comes out of solution when pressure drops
below dew point. Natural gas is used mainly in the industrial, commercial, transportation, and
domestic sectors out of which power and fertilizer sector consume maximum amount of
natural gas in India.
Natural Gas occupies about 8.5% of the total energy basket of the country which is much
lesser than the world average of 24%. However, the scenario is fast changing, largely because
of the expected increase in the availability of natural gas in the country. The structure of
primary energy consumption in India shows that coal (51%) still dominates as the major
energy source. Hydrocarbon (45%) is the next available energy provider of the nation.
Natural gas is fast emerging as an alternative; it meets around 9% of the primary energy
needs. Considering the global trend of shift in energy axis from oil to gas, the share of gas in
consumption pattern, in the Indian context is expected to increase gradually in the days to
come.
2.1.1 Applications of Natural Gas
Natural gas is used by the end user in different ways as per need. The various ways or
applications of natural gas in industry as well as household needs are:
1. Natural gas as a fuel in electricity generation by utilities;
2. Natural gas as a clean fuel in cooking and household needs in the form of Piped
Natural Gas (PNG);
3. Natural gas as a fuel for the boilers, furnaces, baking ovens and air conditioning in
Industries;
4. Natural gas as a motor fuel in the form of Compressed Natural Gas (CNG) and;
5. As a petrochemical and fertilizer industry feedstock.
Page 3
10. 2.2 SOURCES AND SUPPLY
Natural gas in India is available through different channels. The two conventional ways of
sourcing natural gas are:
1. Exploration and production activities in India itself.
2. LNG supplies from different parts of world.
In addition to the above mentioned sources and supply modes some other means are also
followed by the Govt. of India in an order to ensure future energy securities which are:
1. Coal Bed Methane to ensure the availability of gas through large coal reserves
available in the country itself.
2. Transnational NG pipelines (eg. Turkmenistan-Afghanistan-Pakistan-India pipeline,
Iran-Pakistan-India pipeline etc.)
3. Natural Gas Hydrates Programme (NGHP) is employed in order to evaluate NG
hydrate resources and the possible ways to exploit them.
4. Underground Coal Gasification Programme.
2.2.1 Exploration and Production (E&P) sector of India
The E&P activities were promoted with the introduction of New Exploration and Licensing
Policy (NELP I) in 1997 which became effective in year 1999. So far 6 NELP rounds have
been successfully undertaken in which 162 shallow water, deepwater and onland blocks are
awarded to the National Oil Companies (NOC), PSUs, JVs and other foreign exploration
companies. The initial discoveries of Cambay basin, Mahanadi basin and Krishna Godavari
(KG) offshore were found to be interesting enough to promote more and more NELP bidding
rounds. Similarly, significant discoveries were also made in Rajasthan. As per the draft
utilization Policy-2007 of GoI E&P activities accounts for nearly 36% of total estimated
demand for the current year and it is supposed to increase in the coming future. Recently
NELP-VII was introduced with attractive offers and regulations which will definitely
enhance the E&P activities associated with the gas production. According to the sources GoI
is committed to offer exploration blocks in coming years and in the next five years, area
under exploration for Indian sedimentary basins is expected to increase from 44% at present
to 80%. By 2015, whole sedimentary basin area is planned to be brought under exploration.
Currently the Indian gas industry is eyeing on the supply from Reliance KG basin block
which will start supply of 8 MMSCMD of natural gas from the second half of the year 2008.
2.2.2 LNG supply scenario in India
With the growing energy demand and the current state of energy deficienc, LNG came out as
a boon for a country like India. From the current statistics it can be easily inferred that the
future of Indian energy scenario heavily depends on the LNG supplies. The current gas
availability position from various sources in country is as follows:
Page 4
11. (in MMSCMD)
Source Present
ONGC/OIL 53
Pvt./ JVs 20
Total Availability 73
LNG imports by PLL (long term1) 18
2
Spot LNG 05
Grand Total 96
Table 1. Gas Availability Position in India (Source: Draft Paper on Utilization of Natural Gas- India-2007)
Since gas supplies through spot cargoes depends on the international market conditions, India
is focusing on the development of other gas terminals with long term contracted LNG supply
in addition to existing terminals of Dahej, Hazira and Ratnagiri. Similarly, consideration
about the estimated demand increase lead to the selection of Kochi and Mangalore for
development of LNG regassification/liquefaction terminals which will start its operations
from the year 2010-11 and 2011-12 respectively. The overall LNG projections associated
with the vision are3:
LNG Supply 2007‐08 2008‐09 2009‐10 2010‐11 2011‐12
source
Dahej 5.00 5.00 7.50 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 2.50
Mangalore ‐‐‐‐‐‐ ‐‐‐‐‐‐ ‐‐‐‐‐‐ ‐‐‐‐‐‐ 1.25
Total LNG supply 8.70 9.6 15 20 21.25
(MMTPA)
Total LNG supply 30.45 33.60 52.50 70.00 74.375
(MMSCMD)
Table 2. . LNG Projections (Source: Draft Paper on Utilization of Natural Gas- India-2007)
Currently Dahej PLL is the major regassification terminal of India having long term contract
of 25 years with RasGas of Qatar for the supply of 5 MMTPA of LNG but with the advent of
a more active spot LNG market Shell Hazira regassification plant also came into existence in
an order to maintain the LNG supplies in the country.
1
Long term contract is one of the types of contract usually signed by the customer with the supplier in an order
to ensure LNG supplies for a long period of time.
2
Spot LNG is the LNG produced in excess of contractual arrangements &, therefore, available for sale outside
these long term contractual arrangements.
3
Hazira expansion plan to 5.00 MMTPA is not considered in the 11th plan while Mangalore terminal will
partially be commissioned in year 2011-12.
Page 5
12. Figure 1. LNG Supply Chain
The above figure shows the normal LNG supply chain network which comprises of different
facilities for the whole setup. In order to ensure perfect distribution to the end user a robust
pipeline network is required which is still a major challenge to India. Currently India has a
domestic gas pipeline network of 10500 km with current pipeline density of 116
km/MMSCMD. The total domestic gas pipeline network of India in comparison to some
other countries is shown below:
Country Domestic gas pipeline network Domestic gas pipeline
(in km) density
(in km/MMSCMD)
USA 18341138 1086
UK 265155 1016
Germany 230448 1015
Italy 171699 975
France 155943 1405
Pakistan 56400 1044
Spain 16295 319
India 10500 116
Table 3. Comparison of Gas Pipeline Network (Source: assocham.org, press release, May 5, 2008)
In order to cope with the inefficiency generated due to inefficient pipeline infrastructure
PSUs started working on the pipeline laying work and contributed significantly in its
development. The HVJ and DVPL pipelines are the best example of the pipelines laying
ability of the PSUs. The map shown below describes the interstate gas grid envisaged by
GAIL in year 2006 which was focusing on the coverage with a pipeline with a length of 1500
km.
Page 6
13. Figure 2. Interstate Gas Grid Envisaged by GAIL (Source: Corporate Presentation on National Gas
Pipeline and LNG by Mr. B.S. Negi (Dir. BD, GAIL India ltd.) on October2006)
The vision of GAIL generates a pipeline network of 15204 km length. Some of its projections
were based on the effective establishment of transnational pipeline (eg. Myanmar-
Bangladesh-India) which ensures the commitment of GoI in bringing Natural gas from
external sources.
Sl. No Description Pipeline Length (km)
1 HVJ Pipeline (HVJPL 2700
2 Dahej‐Vijaipur P/L project (DVPL) 610
3 Dahej – Uran P/L Project (DUPLP) 474
4 Dabhol‐ Panvel P/L Project (DPPLP) 322
5 Vijaipur –Kota Mathania (Rajasthan Sector) 565
6 Dadri‐ Nangal P/L Project (DNPLP) 572
7 Kakinada‐Pune ‐Uran P/L project (KUPLP) 1024
8 Kakinada–Chennai P/L project(KCPLP) 580
9 Dabhol‐ Bangalore–Cannai P/L Project (DBCPLP) 1100
10 Dahej‐Jamnagar‐Porbandar P/L Project (DJPPLP) 685
Page 7
14. 11 Jagdishpur‐Haldia P/L project (JHPL) 876
12 Vijaipur‐Auraiya –Jagdishpur P/L Project (VAJPLP) 571
13 Kakinada –Haldia P/L Project (KHPLP) 1037
14 Kochi‐ Kanjjirkkod – Mnagalore 425
15 Bangalore‐ Coimbatore – Kochi 440
16 Chennai‐ Tuticorin 550
17 Hyderabad‐ Vijaipur 1100
18 Myanmar‐India Border to Gaya 1573
Total Pipeline Length 15204
Table 4. Description of Envisaged Gail Pipeline Network (Source: Corporate Presentation on
National Gas Pipeline and LNG by Mr. B.S. Negi (Dir. BD, GAIL India ltd.) on October 2006)
2.2.3 Upcoming Resources
1. Coal Bed Methane (CBM): Coal Bed Methane (CBM) is NG found in coal beds and
used for a variety of purposes that range from domestic, commercial, industrial to
electrical power generation. Other gases that may exist in coal gas deposits in trace
amounts are ethane, propane, butane, carbon dioxide and nitrogen. Coal Bed Methane
(CBM) is natural gas found in coal beds and used for a variety of purposes that range
from domestic, commercial, industrial to electrical power generation. In 1997 Indian
government formed a CBM policy that established the Ministry of Petroleum and
Natural Gas as the CBM administrative agency. Key elements of that policy are:
• No upfront bonus.
• No signature bonus.
• No participating interest of the GoI.
• CBM development blocks awarded through a competitive bidding process.
• A 7 year tax holiday, beginning with the date of commercial CBM production.
• Freedom to market in domestic market at market determined prices.
• Imported equipment for CBM development exempted from customs duty
(DGH, 2004-05).
In May 2001, the Indian government for the first time offered blocks for exploration
and production of CBM through an international bidding process. Reliance Industries,
Essar, and ONGC won the bids for the blocks. The government launched a second
round of bidding on nine CBM blocks in May 2003. Eight blocks were awarded to
Reliance and ONGC. The third bidding round of CBM blocks was offered in
February 2006 in which GoI offered 10 blocks. Out of these, two blocks each were
located in the States of Andhra Pradesh, Chhattisgarh, Madhya Pradesh & Rajasthan
and one block each in Jharkhand & West Bengal.
Page 8
15. 2. Transnational Pipelines: With the growing demand of NG as 21st century fuel the
need of laying transnational pipeline from the neighbouring gas rich countries was
experienced. Since pipelines provide natural gas at a lower cost than in other modes
they are much more preferred than other competitive modes of transporting natural
gas. Geographically, India is
flanked by large gas reserves
to the East, West and North
and thus strategically located
to meet its natural gas
requirements through
transnational pipeline. These
sources include the leading
countries in terms of their
proven gas reserves, viz., Iran
(15% of world’s reserves)
and Qatar (14% of world’s
resources). Similarly,
Bangladesh and Myanmar on
the Eastern side, and the
Central Asian Republic of
Turkmenistan in the North
Figure 3. Proposed route for IPI and TAPI pipelines
hold substantial gas reserves.
Considering that the Indian gas markets, especially those in the Northern and Eastern
parts of the country are at economic pipeline distance from regional gas reserves,
there is a price advantage of gas imports through pipelines vis-à-vis LNG route for
these markets, and therefore, all possibilities including need to be explored for import
of natural gas through pipelines. In these TAPI Gas Pipeline and IPI Gas pipelines are
the possible opportunities. The primary purpose of both the pipelines is to fulfill the
requirement of Gas deficit Northern India & Pakistan.
3. Natural Gas Hydrates: A gas hydrate is a crystalline solid; its building blocks
consist of a gas molecule surrounded by a cage of water molecules. Thus it is similar
to ice, except that the crystalline structure is stabilized by the guest gas molecule
within the cage of water molecules. Many gases have molecular sizes suitable to form
hydrate, including naturally occurring gases such as carbon dioxide, hydrogen
sulphide, and several low-carbon-number hydrocarbons, but most marine gas hydrates
that have been analyzed are methane hydrates. The reasons for increasing efforts in
the part of Methane Gas Hydrates are:
• It contains a great volume of methane, which indicates a potential as a future
energy resource.
• It may function as a source or sink for atmospheric methane, which may
influence global climate
• It can affect sediment strength, which can initiate landslides on the slope and
rise.
• The worldwide amounts of carbon bound in gas hydrates is conservatively
estimated to total twice the amount of carbon to be found in all known fossil
fuels on Earth.
Page 9
16. In Indian con
n ntext a lot of work is stil
f ll Percent tage of t total
le to be do
eft one. At present only the e
re
esource esti imation and delineation
d n
carbo on quant tity
of prospectiv areas for methane
ve f e 5% 0% Gas Hydrates s
hyydrate has been done. Preliminary y
st
tudy of se eismic attri ibutes from m 15%
In
ndian deep water offsh hore by Oi il 53%
an Natural Gas Comm
nd mission has 27
7% Fossil fuels
hown the presence of large
sh e
re
eservoirs of methane hydrate a at
depths of 10 to 3000 m, and has
000
su
uggested tha Krishna–G
at Godavari and d Land (include es
soil, biota, pe
eat
Andaman–Ni
A icobar Islannds may be e and detritus)
ex
xplored for hydrates. About 7.5
r 5
Tcm of meth
T hane is estimated in an n
ar of abou 80,000 k
rea ut km2 from F Figure 4. Disstribution of O
Organic Carb in Earth
bon
ndian deep offshores, which is
In r
reservoirs to total Organic Carbon(187
c 776.6 Gigaton n
ab
bout 5 ti imes of the total
t
onventional gas reserves of the cou
co untry. Beside Gas Auth
es, hority of Ind Limited is
dia
ca
arrying exten nsive investi
igations on mmethane hyd drates.
Till
T date, a la arge number of seismic data coveri offshore areas of the country ha
r ing e as
been studied including special proc
d cessing of large data for identific cation of ga as
hy natures. Base on these studies, thre areas in K Basin, A
ydrates sign ed ee KG Andaman Se ea
an west coa were iden
nd ast ntified for fu
further scientific investig gations. A road map wa
r as
4
al prepared for NGHP . As per th road map, detailed ge
lso d he , eoscientific iinvestigation ns
were carried out in the KG Basin and Kerala-Konkan b
w e n basin by NG GHP throug gh
National Inst
N titute of Oc
ceanography (NIO). Ba
y ased on the results of seismic data
e
st
tudies and geoscientific investigatio ten sites in Mahanad KG & K
g ons, s di, Kerala-Konka an
basins and An ndaman Sea have been short listed for drilling/ coring of ga hydrates i
a as in
th deepwater. The drillin coring f gas hydra is a very specialized activity an
he ng/ for ates y d nd
In
ndia will be only third country in the world to do so, aft USA an Japan. Th
e t fter nd he
ervices for such special
se lized activit are not a
ty available com mmercially in the world.
With
W sustaine efforts by DGH, with IODP & USA, the dril
ed y h U llship JOIDE Resolutio
ES on
al
long with al the scient
ll tific equipmment and scie entists onbooard is work king in India an
offshore since May 2006 under an a
e 6, agreement be etween DGH and a "US Consortium
H S m"
of companies After obt
s. taining the gas hydrate cores seve
e eral scientifi studies ar
ic re
being carried out onboard the ship an will also be carried o in severa laboratorie
d d nd out al es
in India, USA and Canad for which separate ag
n A da h greements ha been sig
ave gned by DGH
an correspo
nd onding agen ncies. The studies wil lead to understand gas hydrate
ll
ch
haracterizati in Indian offshore ar
ion n reas and also in carrying out resourc estimate
o g ces es,
as well as R&D in this field. Durin drilling/c
s R ng coring by dr rillship presence of hug ge
quuantities of Gas Hydrat has been detected in one of the wells in K
tes n n e K.G. Basin. A
4
NGHP is a consortium of National E& companies (Oil and Natur Gas Corpor
o &P ral ration Ltd., Gas Authority of
s
India Ltd & Oil India Ltd and Nationa Research Ins
d.) al stitutions (National Institute o Oceanography, National
of
Geophysic Research In
cal nstitute and Nat
tional Institute of Ocean Tech hnology) steere by MoPNG and DGH in
ed G
order to ac
chieve the comm
mercial producction of Gas thr rough NG hyd drates beyond 2 2010.
17. specialized core repository is also being constructed in Panvel, Mumbai for storing all
the valuable gas hydrate cores for future studies.
2.3 ADVANTAGES OF USING NATURAL GAS
Natural Gas offers multitude of advantages pertaining to the environment as well as the
energy efficiency. Some major advantages or benefits that it offers are:
1. It is a clean, efficient, safe and environment friendly fuel hence offer more efficiency
without sacrificing the environmental concern;
2. It does not required storage yard as the gas is directly delivered to the pipeline hence
offer less chances of any mishap due to storage leakage and spillage of storage tanks;
3. There is no risk of breakdown in fuel supply due to order processing delays to
replenish the fuel inventory;
4. It minimizes the manpower and mechanical power required for handling the fuel; and,
5. In terms of the current global oil scarcity it offers the advantage of being the most
efficient and profitable alternative fuel.
Page 11
18. CHAPTER 3: CITY GAS DISTRIBUTION
3.1 INTRODUCTION
With the growing concern about environmental aspect GoI started CNG rollouts in cities
suffering from increasing pollution. The CNG demand got a boost with the Supreme Court
directive on pollution reduction in 12 major cities in India and hence provided a platform to a
highly ambitious sector of City Gas Distribution in cities like Delhi. Mumbai, Surat,
Lucknow etc. Various organizations like GAIL, IOCL, BPCL, GGCL entered into this sector
by forming JVs with other players and provided the sector the necessary thrust it deserve.
The CGD network caters to the supply of Piped Natural Gas (PNG) to domestic Households
(HH) & small commercial/industrial establishments & CNG to automobile sector.
Considering CGD as the last milestone of Indian gas chain lot of efforts has been done by
various players and GoI to ensure last mile connectivity of gas which has been substantial in
the current decade.
Figure 5. Indian Gas Chain (Source: GGCL Investors Meet, March27, 2008)
With the introduction of PSUs in all of the sectors of the Indian gas chain the gas chain has
become more structured and organized. Currently major oil PSUs like Indian Oil Corporation
Ltd, Bharat Petroleum Corp. Ltd and Hindustan Petroleum Corp. Ltd are providing
substantial support in all parts of the gas chain with the formation of JVS like Green Gas Ltd
(GGL) in Lucknow & Agra, Indraprastha Gas Ltd (IGL) in Delhi-NCR etc. With a vision to
empower most of the cities and the citizens by providing access to natural gas oil PSUs are
coming up with more plans on CGD network development.
The demand pattern (Gas) zeroed by the Ministry of Petroleum and Natural Gas (MoPNG) in
its Draft Paper on Utilization of Natural Gas-2007 for CGD network is as follows:
Page 12
19. Year Estimated Demand of Natural gas (In
MMSCMD)
2006‐07 11.00
2007‐08 12.08
2008‐09 12.93
2009‐10 13.83
2010‐11 14.80
2011‐12 15.83
Table 5. Estimated Demand Pattern of NG in CGD Networks (Source: Draft paper on utilization of
natural gas in India-2007)
Considering the above stated projections for the growing demand of NG it has been evident
that the CGD networks are going to get a special place in the Indian national government
policies. The table shown below will show the picture of estimated NG demand on a macro
level and will provide the comparative analysis of demand increase in CGD sector with
respect to the other sectors.
Sector wise Gas Demand Projections 2007‐12 (in MMSCMD)
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
CGD 12.08 12.93 13.83 14.80 15.83
Industrial 15.00 16.05 17.17 18.38 19.66
Petrochemicals/Refineries/Internal 25.37 27.15 29.05 31.08 33.25
Consumption
Sponge iron/Steel 6.00 6.42 6.87 7.35 7.86
Total 179.17 196.64 225.52 262.07 279.43
Table 6. Source: Draft paper on utilization of Natural Gas in India-2007
2008‐09 2009‐10 2010‐11 2011‐12 Average
Percentage
increase
Power 14.43 12.60 11.19 10.83 14.70
Fertilizer 4.56 30.33 36.42 0.0 21.481
CGD 7.03 6.96 7.01 7.0 7.76
Industrial 7.00 7.00 7.04 6.96 7.76
Petrochemicals/Refineries/Internal 7.01 7.00 6.99 6.98 7.76
Consumption
Sponge iron/Steel 7.00 7.00 6.99 6.94 7.76
Table 7. Percentage increase in estimated gas demand in different sectors
The above drawn tables show that the projections are based on the estimated 7.0 percent
growth rate in sectors other than power and fertilizers. The inference that can be drawn easily
is that while the demand in power and fertilizer sectors will grow sharply because of more
and more requirements and introduction of CCGT (Combined Cycle gas Turbine) plants in
power sector the development work in establishing the CGD networks will be done in a
consistent and phased manner.
Page 13
20. The consumers of NG via CGD network are classified into different categories based on their
capacity and end use. They are broadly classified as:
Serial No. Type of Consumer Description
1 Domestic consumers Consumers demanding NG for cooking as well as for
heating water etc.
2 Commercial consumers While Hotels, Restaurants, Sweetshops, Hospitals,
Offices etc. would primarily require gas for the Cooking
and Hot Water requirement, there are large number of
applications within such segments that can use gas.
3 Industrial consumers Industrial Consumers are classified in two primary
categories, the Large Scale Industries (LSI) & Medium &
Small Scale Industries5
4 Transport Sector Transport Sector need NG for the transportation
purpose and catered through the development of
Compressed Natural Gas stations network.
All four types of consumers consume different amount of Natural gas in performing their
operations. They need NG via different channels and the form in which they receive NG is
also different (like automobiles receive it in the form of CNG while domestic HH receives it
in the form of PNG) leading to a different prices for them and creates a different margin with
each MMSCMD of gas supplied to them. In a nutshell, the profitability reduces from
commercial consumer to bulk consumer. The picture shown below will establish the relation
between some major factors considered while developing CGD network in a city.
Figure 6. Segment size and profitability (Source: GGCL Investors meet, March27, 2007)
5
The Large Scale Industrial units demand (more than 50,000 SCMD) would be supplied gas from trunk
pipeline i.e. Steel Grid at relatively higher pressures as compared to the other industrial segment while The
Medium & Small industrial units demand (less than 50,000 SCMD) would be met from distribution network
having a mix of Steel & Poly-Ethylene pipes depending on the need of the consumer in terms of pressure as well
as volume of Gas required.
Page 14
21. 3.2 COMPRESSED NATURAL GAS (CNG)
Compressed Natural Gas, in short CNG is nothing but Natural gas compressed for the use of
transport sector. Due to its low density, it is compressed to a pressure of 200-250 kg/sq. cm to
enhance the vehicle on-board storage capacity. Principal constituents of NG are Methane and
Ethane, but most gases contain varying amounts of heavier hydrocarbons that are normally
removed by processing. After recovery of the heavier hydrocarbons, the remaining gas,
known as lean gas, is returned to the pipeline system. Natural gas is drawn from pipeline
system for compression and distribution as CNG. Predominantly Methane is available in the
lean gas; hence CNG contains mostly methane (normally not less than 85%).
CNG is one of the safest fuels as it has a high auto-ignition temperature of about 540 degree
centigrade and a very narrow range of flammability (i.e. 5% to 15%). In other words, if CNG
concentration in the air is less than 5% or above 15%, it will not burn. Further, it is lighter
than air and in case of any leakage, natural gas will go up in the air and chance of any
ignition is remote.
3.2.1 Types of CNG stations
CNG stations are of four major types depending upon the structure and operations:
1 CNG Mother Stations: Mother Stations are connected to the pipeline and have high
compression capacity. These stations supply CNG to both vehicles and daughter stations
through mobile cascades 6 . The Mother Station requires heavy investment towards
compressor, dispensers, cascades, pipelines etc.
2 CNG Online Station: CNG vehicle storage cylinders need to be fitted at a pressure of
200 bars. Online stations are equipped with a compressor of relatively small capacity,
which compresses low-pressure pipeline gas to the pressure of 250 bars for dispensing
CNG to the vehicle cylinder.
3 CNG Daughter Station: The Daughter Stations dispense CNG using mobile cascades.
These mobile cascades at daughter stations are replaced when pressure falls and pressure
depleted mobile cascade is refilled at Mother Station. The investment is least among all
types of CNG stations.
4 CNG Daughter-Booster Station: Installing a booster compressor can eliminate
drawbacks of daughter stations. The mobile cascade can be connected to the dispensing
system through a booster. Daughter booster is designed to take variable suction pressure
and discharge at constant pressure of 200 bars to the vehicle being filled with CNG.
The diagram shown below represents the actual flow of NG from trunk pipeline right up to
the end user.
6
Mobile cascades are cylinders mounted on a vehicle to transport CNG from mother station to daughter and
daughter-booster stations.
Page 15
22. Figure 7. Process description of CNG network (source: corporate presentation by A.K. De, IGL)
3.2.2 Design parameters for CGD network
Pipeline pressure Specifications
Main transmission grid line pressure (High Pressure System) = 14‐19 bar, Steel
Distribution/Service line pressure (Medium Pressure System) = 4 to 1.5 bar, MDPE
Domestic connection pressure (Low Pressure System) = 21 mbar, GI Installation
Supply pressure (large commercial consumer) 2 bar
Supply pressure (small commercial consumer) 300 mbar
CNG dispensing facilities specifications
Inlet Pressure: 14‐19 Kg / cm2
Outlet Pressure: 255 Kg/cm2
Cascade capacity specifications
4500 liters of water / cascade (around 31 cylinders)= 500 kg
2200 liters of water / cascade (around 31 cylinders) = 350 kg
Average filling capacity (in kg)
Bus 80
Car 8
Auto 3.5
Page 16
23. Total filling cycle time per vehicle (in minutes)
Bus 8
Car 4
Auto 2
Table 8. Specifications related to the CGD network
3.2.3 Characteristics of CNG vis-à-vis Petrol
The quantity of CNG filled by the dispenser during refueling also depends upon pressure at
the dispensing station. At maximum permitted filling pressure (200 bar), an amount of 8/9/10
Kg CNG is stored in 40/50/60 liter size cylinders respectively which is equivalent
(approximately 11.2/12.5/14 liters of petrol equivalent. However the gas quantity depends on
ambient condition and actual fill pressure.
Since CNG is a gaseous fuel, storage capacity for CNG in a vehicle is comparatively less
than that of petrol. A Fuel switch on the dashboard is fitted to enable the vehicle to run on
petrol, in case it runs out of CNG. CNG has a much higher-octane value than petrol, making
it a superior fuel. Due to absence of any lead content in CNG, the lead fouling of plugs is
eliminated. Being a gaseous fuel, CNG mixes with air easily even at very low temperatures.
Main features distinguishing CNG from Petrol and Diesel are:
Properties Unit CNG Petrol Diesel
Liquid specific ‐‐‐ ‐‐‐ 0.74 0.84
gravity
Heat of BTU/lbs ‐‐‐ 160 200
evaporation
Density relative Air = 1 0.6 3.4 3.9
to air
0
Auto ignition C 540 232‐282 225
temperature
Flammability limit % in Air 5 – 15 1 – 8 0.6 – 5.5
0
Flame C 1790 1977 2054
temperature
Octane no. ‐‐‐ 127 87 ‐‐‐
Cetane no. ‐‐‐ 10 10 45
Table 9. Comparison of CNG with respect to Petrol and Diesel
3.2.4 Economies of CNG
The energy content per Kilogram (Kg) of CNG is very similar to that of petroleum based
fuels, but it has lower energy content per unit of volume. The excellent knock resisting
property of CNG allow use of a higher compression ratio resulting in an increased power
output and greater fuel economy when compared to petrol. CNG can be used in engines with
a compression ratio as high as 12:1 compared to normal gasoline (7.5:1 to 10:1). At this high
Page 17
24. compression ratio, natural gas-fuelled engines have higher thermal efficiencies than those
fuelled by gasoline. The fuel efficiency of CNG driven engines is about 10-20% better than
diesel engines.
Use of CNG in vehicles results in higher mileage per unit due to its superior characteristics.
The cost of CNG is also very competitive to that of petrol and diesel. Following table depicts
the price advantage of CNG vis-à-vis other petroleum fuels currently being used in vehicles.
Economies of CNG car
Price (Delhi) Mileage (km Cost per Km Annual
Fuel per Kg per unit) (in Rs) expenses
Petrol 50.62 18 2.81222222 98427.78
Diesel 34.86 14 2.49 87150
Auto LPG 16.5 0 0
CNG 18.2 25 0.728 25480
Table 10. Average distance traveled is 100 km/day. 350 operational days in a year
Economies of CNG bus
Price per unit Mileage (Km Annual
Fuel (Delhi) per unit) Cost per Km expenses
Diesel 34.86 4 8.715 915075
CNG 18.2 4.4 4.13636364 434318.1818
Table 11. Average distance traveled is 300 km/day. 350 operational days in a year
It’s been evident from the above shown table that CNG offers more mileage and since per
unit price of CNG is lesser than the price of petrol and diesel in most of the cities the savings
get more escalated. In a nutshell, CNG offers more savings with better mileage in comparison
to other competitive fuels.
3.3 STRUCTURE OF CGD NETWORK
Setting up of a CGD network is a big task in itself in terms of management of public private
interest. It is not only a matter of distribution and marketing of the product it is also about
creating a feeling of security in the mind of prospective customers. PNGRB board has
provided the guidelines in the form of its “Draft Paper on Access Codes” which has clearly
mentioned the responsibilities associated with the transporter and shipper making things more
clear to both parties. The essential elements of a CGD network are:
1. Steel grid pipeline
2. City Gate Station (CGS)
3. District Regulating Station (DRS)
4. CNG stations
5. Service Regulator (SR)
Page 18
25. All of the above mentioned facilities are directly related to each other and thus have a deep
impact on the functioning of the whole CGD network. As far as the cost is concerned the
establishment of these fundamental facilities bring major cash outflow to the distribution
company. The networking is defined as:
Figure 8. CNG process network
The above figure shows constituents of an effective CGD network where each unit perform
its job to ensure the proper working of the system. A brief description of some of the units
mentioned above is given below:
1. City Gate Station: The point where custody transfer of NG from high / medium
pressure transmission pipeline to the CGD network takes place.
2. Distribution Pressure Regulating Station/ District Regulating Station:
“Distribution Pressure Regulating Station or District Regulating Station (DPRS)”
means a station located within authorized area for CGD network having isolation,
metering, pressure regulating and overpressure protection devices.
3. Service Regulator: It reduces the gas pressure from 4 BAR to 100 mBAR and
ensures the flow of gas at constant pressure at all time.
4. Meter Regulator: Installed before the meter, the meter regulator reduces the gas
pressure from 100 mBAR to 21 mBAR.
Page 19
26. 3.4 INDRAPRASTHA GAS LIMITED (IGL)
Indraprastha Gas Ltd. is one of the leading gas distribution companies in India performing the
business of City Gas Distribution. It was incorporated in 1998 and took over Delhi City Gas
Distribution Project in 1999 from GAIL (India) Limited (Formerly Gas Authority of India
Limited). The project was started to lay the network for the distribution of natural gas in the
National Capital Territory of Delhi to consumers in the domestic, transport, and commercial
sectors.
The prime business objectives of the company are:-
• To provide a safe, convenient, reliable natural gas supply to our customers in
domestic and commercial sector; and,
• To facilitate conversions of commercial and private vehicles to CNG through external
agencies.
IGL got listed in December 2003 in BSE and became a public limited company. With a
public shareholding of 55% its gross income increased to Rs 596 crore in financial year 2007
(April-December) from Rs 7 crore in year 1999-00. As per the data available 92% of its
revenue comes out of CNG business while commercial sector contributes meager 6% in the
total revenue; 2% of its business comes out of its PNG distribution network.
The success story of IGL can also be termed as the after effect of the order of Hon. Supreme
court of India which forced Indian commercial vehicle owners to turn to CNG. In less than 10
years the total number of CNG vehicles in Delhi (including buses, autos, RTVs and others)
increased by more than 30 times of the total number of CNG vehicles present in year 1999-
2000.
In less than 10 years IGL has developed its own 64 CNG station and crossed the 150 mark on
account of total number of CNG dispensing station in Delhi. Currently IGL boasts of a chain
of 166 CNG dispensing stations with a total average daily CNG sale of 1.05 million kg/day
(FY 2008).
On the front of Piped Natural Gas (PNG), IGL serves the interest of 110000 domestic, 250
small commercial and 46 large commercial consumers and sells 31 MMSCM of PNG to the
customers. In last few years the status of the company rose up to a great extent which is
evident from its dividend distribution in last5 years. The dividend which has been paid to its
share holders has been increased to 30% of equity from 5% of equity in financial year 2003.
With a great success in Delhi IGL also set up its stations in NOIDA as a step towards the
future.
In terms of coverage IGL provide CNG to the consumers of Delhi, NOIDA, Greater Noida,
Ghaziabad, Gurgaon and Faridabad directly and indirectly. It envisages a dream of adding
highway mobile dispensing units and has a target of providing PNG to 3 lakh user families in
2010.
Page 20
27. The best part of IGL is its supply; the gas it delivers comes from the nominated fields which
enable it to provide NG at a cost much lower than the market price of NG.
3.4.1 Future Outlook
IGL is now focusing on conversion of private vehicles (private cars) to CNG. In this
connection efforts are being made on the private vehicle front encouraging them to convert to
CNG mode. IGL has been coordinating with CNG kit suppliers, Transport Department,
Automotive Research Association of India (ARAI) and Vehicle Research and Development
Establishment (VRDE) to ease the process for endorsement of the same on Registration
certificate of the vehicle.
The company is in the process of enhancing its compression capacity by adding new stations
and also by converting the daughter and daughter booster stations to mother and online
stations.
IGL is also working towards expanding its gas retail network to the other cities of National
Capital Region (NCR) viz. Noida including Greater Noida, Gurgaon and Faridabad. The
Company aims to lay natural gas pipe grid in these cities to set up CNG stations and
providing PNG to domestic, commercial and industrial sectors. Recently IGL has got
approval from MoPNG to develop 50 more CNG stations in NCR region and ministry has
also directed Delhi state urban development minister to support IGL’s expansion program by
providing land to the company at affordable price.
3.5 MAHANAGAR GAS LIMITED (MGL)
The MGL project started in 1995 from Chembur and now it has covered major parts of
Mumbai through its distribution network i.e. from South Mumbai to Mira Road and Sion to
Mulund & Thane. Today MGL has become a leading consumer friendly gas company with a
customer tally of 3.52 lakhs connected PNG users and around 970 small industrial &
commercial customers. It powers over 53,942 taxis/cars , over 1.28 lakh autorickshaws, 597
BEST buses,50 TMT Buses, 260 Private Buses and 45 Mini Buses across the city through its
network of 130 CNG stations having 637 dispensing points, thus contributing to more than
760 metric tonnes reduction of pollutants every day. MGL recently launched Piped Natural
Gas in South Mumbai to bring the convenience of Natural Gas to South Mumbaikars & is
expanding the pipeline network in Navi Mumbai.
In less than 2 decades MGL has established 130 CNG outlets in Mumbai, Thane, Mira-
Bhavander and Navi Mumbai in which 118 outlets exists in Mumbai only catering 1,59,850
CNG vehicles of Mumbai only. In gross figures MGL provide CNG to the existing 1,86,467
CNG vehicles in Maharashtra.
Out of the total number of CNG stations of MGL online stations account for 113 stations
while Mother and Daughter booster stations account for 4 and 13 stations respectively.
Over the years MGL has also made significant growth in PNG sector. MGL has laid network
of over 2299.74 km of medium pressure and lower pressure PE pipelines & 238 km of High
Pressure steel network to cater to over 6 lakh potential consumers in the city. It has already
Page 21
28. covered more than 3.52 lakh domestic, 934 commercial and 36 small industrial consumers.
With this MGL has become the largest city gas distribution company in India with reference
to consumer base. In addition to it MGL also provide services like Voluntary Deposit Scheme
(VDS) to its PNG customers to make the bill payment process more easy and convenient.
3.5.1 Future Outlook
MGL has made ambitious plans for CNG & PNG expansion in Mumbai, Thane & Navi
Mumbai. It has laid around 238 km of steel pipeline and 2299.74 km of polyethylene
pipeline. Further, the plan includes setting up of more number of CNG outlets as well as
enhancing CNG compression capacity and dispensing points to provide CNG to the vehicles
with minimum possible dry run and waiting. MGL has also started looking for opportunities
to expand its area of operations in the areas adjoining Mumbai city as well as providing value
added services to the consumers.
3.6 CITY GAS ACTIVITIES IN INDIA
The following cities are covered for City Gas Distribution in India.
S.No. Cities Company Company incorporated on
1. Delhi IGL (JV of GAIL and BPCL) Dec 1998
2. Mumbai MGL (JV of GAIL and BG) May 1995
3. Lucknow & Agra Green Gas Limited (JV of GAIL Oct 2005
and IOC)
4. Kanpur Central UP Gas Limited (JV of Feb 2005
GAIL and BPCL)
5 Hyderabad, Bhagyanagar Gas Limited (JV Aug 2003
Vijaywada of GAIL & HPCL)
6 Ahmedabad Adani Energy Limited Jan 2004
7 Surat, Ankleshwar, Gujarat Gas Company Limited 1988
Bharuch (A Company controlled by BG,
UK)
8 Tripura Tripura Natural Gas Company July 1990 / restructured and
Ltd ( JV of GAIL, Govt. of inducted GAIL as a majority
Assam and Govt. of Tripura partner (29%) in Feb 2005
9 Duliajan, Digboi, Assam Gas Company Ltd. March 1962
Dibrugarh, Moran,
Naharkatiya,
Sivasagar, Nazira,
Simaluguri and
Tinsukia Town
9 Pune Maharashtra Natural Gas Jan 2006
Limited (MNGL), JV of GAIL
and BPCL
10 Indore / Madhya Aavantika Gas Ltd (AGL), JV of June 2006
Pradesh GAIL and HPCL
11 Gandhinagar, Sabarmati Gas Ltd, JV of GSPC June 2006
Page 22
29. Mehsana & and BPCL
Sabarkantha (in
Gujarat
12 Rajkot, GSPC Gas 2006
GandhiNagar, NH in
Gujarat
13 Ahmedabad HPCL 2006
14 Vadodara GAIL 1969‐70
Table 12. Cities covered for city Gas Distribution in India (as on April, 2007)
From the above shown table, it is clear that the CGD networks are successfully established in
more than 15 cities and producing very good results for the entities developing these
networks. With a vision to increase the number of cities covered by the CGD network about
74 more cities are zeroed by GAIL India Ltd. On the other hand Reliance Industries Ltd. has
proposed to lay a city gas distribution network in around 100 cities and towns during the XI
five-year plan. The details of the applications are as follows:
City(ies) targeted for Gas source Pipeline connectivity
(Andhra Pradesh) KGD/6 Kakinada‐Ahmedabad
Vishakhapattnam, Kakinada, Vijayawada,
Nalgonda, Hyderabad
(Maharashtra) KGD/6 Kakinada‐Ahmedabad
Sholapur, Pune, Thane
(Tamil Nadu) KGD/6 Kakinada‐Chennai pipeline
Chennai and 25 selected cities of Tamil Nadu
(West Bengal) NEC‐25 Kakinada‐Basudebpur‐Howrah
Kolakata, Midinapur, North 24 Paragana &
Bardhaman
(Karnataka) KGD/6 Chennai‐Bangalore‐Mangalore
Bagalokot, Bhatkal, Kollegal, Belgaum, Bidar,
Mangalore, Bellary, Channapatna, Mysore,
Gulbarga, Chikmangalur, Nanjangarh, Hatti,
Dandeli, Puttur, Hospet, Devanhalli, Sirsi,
Mudhol, Dod Ballapur, Tumkur, Ramdurg,
Hassan, Dasarahalli, Sankeshwar, Hoskote,
Bommanahalli, Wadi, Hubli‐Dharwad,
Krishnarajapura, Adyar, Hunsur,
Byatarayanapur, Bangalore, Karwar,
Davangere
Table 13. Details of proposed CGD network by RIL (as on April, 2007)
Out of the above mentioned cities, Reliance has already submitted EOIs for 52 cities to the
PNGRB Board for the development of CGD network. The above shown facts create an aura
of increasing number of CGD networks by the end of XI five year plan and thus making
CGD a promising venture to the companies eyeing for it in the coming future.
Page 23
30. CHAPTER 4: INDIAN OIL CORPORATION LTD.
4.1 INTRODUCTION
From refining and marketing activities to E&P activities in India and overseas, Indian Oil
Corporation has registered itself in every field of operation in petroleum sector. Its ubiquitous
presence in Oil & Gas industry and leadership in its all downstream operations is leading it
towards the overall success in every aspect. Presently IOC is the largest commercial
enterprise with leading market share of 44% in downstream sector. It is the highest ranked
Indian corporate in Fortune’s list of World’s 500 Largest Companies (#135). It is also ranked
as the 20th largest petroleum company in the world by Fortune Global 500. On domestic
grounds it has been quoted as India’s Most Trusted Fuel Pump Brand by ET brand Equity-
AC Nielson Survey 2007.
The major role that it plays in Gas sector ranges from sourcing to marketing. It has got 12.5%
stake in Dahej-PLL and is in the process of sourcing more LNG, building LNG infrastructure
and expanding the customer base further. An LNG import terminal is planned at Ennore near
Chennai. IOC has incorporated a Joint Venture named as Green Gas, (GGL) with GAIL for
City Gas Distribution at Lucknow and Agra. GGL has already commissioned 4 CNG Stations
(Mother Station – 1 no and Daughter Booster Station – 3 Nos) at Lucknow. In Agra, GGL
has commissioned 3 CNG Stations (1 Mother Station and 2 Daughter Booster Stations). The
average sale of CNG at Lucknow and Agra is approx. 31,000 & 24,000 Kg / day respectively.
Considering the current operation, the projected sale is around Rs 55 Cr. However, it is
estimated that after the development of the planned project activities in 4 to 5 years, the
turnover would be in the range of Rs 400- 500 crore.
IOC has Franchise Agreements with IGL and MGL for installation of CNG Dispensing
facilities at the existing retail outlets of MS / HSD in Delhi & Mumbai respectively. Further,
IOC has executed Franchise Agreements with Adani Energy Limited and Gujarat State
Petroleum Corporation (GSPC) for providing CNG Dispensing facilities at the retail outlets
in Ahmedabad City / R.O. at National Highways of Gujarat. It is also in discussion with
Green Gas Limited, SITI Energy Limited and GEECL to sign the Franchise Agreements for
Agra & Lucknow, Moradabad and West Bengal.
IOC and GAIL has also agreed to develop the CGD projects in other Eastern States i.e.
Assam, Bihar, Jharkand, Orissa. It has executed MoU with Great Eastern Energy Company
Limited (GEECL) for joint development of City Gas Project based on Coal Bed Methane in
Assansol and Burdawan. Finalization of Joint Venture Agreement for incorporation of a JV
Company for the purpose is in advanced stage. It is also in discussion with a company
(having gas reserves in India) to jointly develop city gas projects in various cities / states and
union territories like A.P., Maharashtra, Karnataka, Tamil Nadu, Kerala, Rajasthan, Madhya
Pradesh, Punjab, Haryana, Chandigarh, Himachal Pradesh, Uttaranchal.
4.2 SWOT
SWOT analysis of the OMC in context of the City Gas Distribution is discussed in the
following table.
Page 24
31. Strengths Weaknesses
• Presence in most of the states. • Scarcity of experienced individuals in
• Prior experience as a partner in GGL. CGD.
• Stake in Dahej‐PLL and existing • Currently no other gas source except
exploration blocks in India and Dahej‐PLL is available.
overseas.
Opportunities Threats
• Increasing demand for NG in Indian • Increasing competition in CGD
cities. business.
• Increasing NG prices.
Table 14. SWOT analysis of IOCL in terms of CGD network operations
Page 25
32. CHAPTER 5: DADRI-PANIPAT PIPELINE PROJECT
5.1 INTRODUCTION
To feed the increasing demand of Natural Gas, Dadri-Panipat RLNG pipeline marketing and
laying rights were awarded to IOCL. The pipeline will be of 132 km length and will provide
an economic means of feeding NG to the captive power plant at Panipat refinery. The major
purpose behind the laying process of Dadri-Panipat spurline is to replace Naphtha with NG.
The RLNG pipeline will receive NG through HVJ pipeline at Dadri and will cater the needs
of about 7 districts falling in the vicinity of the proposed pipeline. Major districts which will
fall in the vicinity of the proposed pipeline are:
• Panipat (HR)
• Sonipat (HR)
• Baghpat (UP)
• Meerut (UP)
• Ghaziabad (UP)
• Gautam Budh Nagar (UP)
• Bulandshahr (UP)
The proposed pipeline route (as decided by the organization) originates from GAIL's Dadri
terminal and traverse towards north, crosses NH 24 near village Masuri, Hapur-bypass-road
(NH 58), River Hindon, River Yamunna, NH-1 and enters the ROW of MJPL at MJPL
Chainage 87.70 km ex-Bijwasan and continues up to MJPL Chainage 106.00 km ex-Bijwasan
and thereafter in common ROW of MDAJ hook-up line for approx. 5.5 km. A branch
pipeline to NFL will take off at Village Diwana near Panipat from the Dadri-Panipat R-LNG
pipeline. The pipeline route has been finalized so as to avoid human habitation, factories etc.,
as far as possible.
The proposed pipeline work is under progress and the plans for setting up robust CGD
network in some of the cities close to the proposed pipeline are under consideration.
Currently, IOC is considering overall demand of NG in the above mentioned districts and has
plans to set up CGD network starting from the selected cities in a phased manner. The cities
of the district that would be selected for the development of CGD network would be covered
in a multi phased format and will be supplied NG as per the requirement of the city itself. On
some technical and commercial grounds7 it has been calculated that the area within 25 km
range (on each side) of pipeline would be best for the initial phase of the CGD network setup
process and thus facilitate further establishment of the CGD network in whole district. On the
similar grounds industrial customers with demand of more than 3000 SCMD were zeroed to
find out the potential of NG demand in respective districts. Major cities complying with the
norms and regulations of PNGRB and satisfying the minimum Return on Investment (RoI)
requirement will be considered as the first preference. The study is aimed to investigate the
profitable and compatible aspects of cities and districts and thus provide the reasons and
rationalé for selection of the best possible choice.
7
The decision is taken after considering the limited supply in first phase of CGD network setup and the
industries located near the pipeline. PNGRB regulations are also considered while taking decision
Page 26
33. There are several reasons associated to the development of CGD network in the above
mentioned districts. The reasons range from the micro and macro economic impact to the
brand positioning and stretching of IOC product line. The selection of districts/cities would
be done on the basis of total NG demand assessment including Industrial, Domestic and
Automobile sector demand in the form of NG, PNG and CNG respectively and some other
factors. The overall NG demand potential for the above mentioned districts for particular
cities is calculated through the analysis of data available to the organization. While districts
are undertaken in an order to ascertain the total maximum potential for NG market, cities are
being focused after due considerations to the phased improvements to the CGD network
process itself.
5.2 SOURCING OF NATURAL GAS
Currently IOC is getting NG from Dahej PLL and Ratnagiri Gas and Power Pvt. Ltd. On
combination of both it comes out as 5.27+1.74 MMSCMD of Natural Gas, out of which a
handsome amount of gas is supplied to its existing customers. The table below shows the list
of existing customers and the contracted amount of NG supplied by IOC to them;
Customer Existing Qty in Revised Qty in MMSCMD
MMSCMD
Essar Steel 1.5000 0.5000
CFCL 1.4700 1.4700
TCL 0.5300 0.5300
NFL 0.3400 0.3400
GSPC 0.9000 0.9000
Surya Roshni 0.0240 0.0300
HNGIL 0.1100 0.1100
LNG by Road 0.0500 0.2000
Naphtha Cracker Nil 0.5000
Mathura Refinery 0.2500 0.2500
Gujarat Refinery NIL 0.1500
CGD NIL 0.1500
Osaram 0.0100 0.0100
Bhushan Steel 0.0100 0.0100
Benlon 0.0100 0.0100
LM Steel 0.0080 0.0080
Delta Foods 0.0070 0.0070
Allied Strips 0.0030 0.0100
SPL 0.0100 0.0100
GGL 0.0100 0.0350
Gujarat Glass 0.0100 0.0100
Amgen Power 0.0100 0.0100
Siti Energy 0.0100 0.0100
TOTAL 5.27 5.26
Table 15. Existing and revised contracted quantity of NG by IOCL
Page 27
34. On the basis of the above mentioned table it’s been evident that IOCL is having spare capacity of
0.1500+1.74 MMSCMD available for CGD operations (on ad-hoc basis).
5.3 METHODOLOGY FOR CALCULATION OF POTENTIAL NG DEMAND
The potential industrial NG demand for year 2012-13 is taken from the report submitted to
IOCL by MDRA group out of which three scenarios were drawn having a switching over
pattern of 45-59%, 60-74% and 75-89% for pessimistic, realistic and optimistic scenarios
respectively.
The PNG demand is calculated from the Indane LPG sales in the respective towns and cities
which were extrapolated to the total sales in that city/town by the market share of Indane
LPG in respective town/city. The result thus procured is converted into the total LPG demand
after considering the fact that domestic LPG accounts for 96% of the total LPG consumption.
The figures thus obtained are converted into NG equivalent using conversion factors and total
PNG demand is calculated.
CNG demand in the city/town is calculated from the vehicular population profile of the city
and some statistics related to it (mileage, avg. daily distance travelled). The total CNG
demand is thus converted to NG to calculate the potential NG demand.
While determining the PNG and CNG demand the switching over pattern is taken constant (at
10% upto year 2012-13) to create parity amongst all the cities/towns considered in the study.
5.4 CRITERIA FOR CITY SELECTION
While total expected demand of NG can be one of the major benchmark for the selection of
town/city for CGD network establishment some other factors like current status in terms of
EOIs and State Govt. policies and moves can also play major role in making decision. On the
basis of the experiences of IGL and MGL a checklist is prepared covering most important
aspects of city town selection in addition to the expected NG demand.
S. No. Selection Criteria
1 Closeness to the proposed RLNG pipeline
2 Administrative action by the state to promote NG in the city/town
3 Total population of the city/town
4 Status of the city/town in terms of EOI to the PNGRB Board
5 Existing LPG and CNG demand
6 Infrastructure of the city/town
7 Level of urbanization in the city/town
Table 16. Possible selection criteria for Cities/Towns for CGD network establishment
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35. CHAPTER 6: HARYANA (HRY)
6.1 INTRODUCTION
Located in northern part of India, Haryana emerged as a separate state in the federal galaxy of
the Indian Republic after being carved out of the state of Punjab on November 1,1966. With
just 1.37% of the total geographical area and less than 2% of India’s population, Haryana has
carved a place of distinction for itself during the past three decades. Today Haryana is among
the most prosperous states in India, having per-capita income of Rs 49038 at current prices
(Source: Economic Survey of Haryana, 2007-08) in the country. It is a leading manufacturing
hub as it is also home to Maruti Suzuki India Limited, India's largest automobile
manufacturer, and Hero Honda Limited, the world's largest manufacturer of two-wheelers.
Panipat, Panchkula and Faridabad are also industrial hubs, with the Panipat Refinery being
the second largest refinery in South Asia. There is also an established steel and textile
industry in the state of Haryana.
When it comes to financial health Haryana one among the three best performing states in the
country. Haryana had the minimum fiscal deficit of 0.6 per cent in financial year 2006-07.
Haryana tops the list in terms of per capita investment in the fiscal year 2007 with an
investment of Rs 1,86,045 crore. Ninety-three of top Fortune 100 companies already have
their corporate offices and production bases in Haryana. In 2006-07 Haryana received foreign
direct investment projects of over Rs 11,000 crore in the state and corporate sector.
Recently, Haryana has come up with New Industrial Policy (NIP) which is formulated for
generation of rapid industrialization and
jobs to the people of Haryana. As per the
data available Haryana is equipped with
682 new industrial units with an
investment of 230 crore.
Famous for its industries and its cultural
values, Haryana is one of the most
prolific and growing states of India. The
fact file of Haryana and its growth
statistics corroborates the claims ade by
the Haryana Govt. Development of
Industrial estates like Precision Tools
Complex at Rohtak, Footwear Park at
Bahadurgarh and Aparel Park at Barhi
(Sonipat) are some of the recent works
that account for the increased industrial
growth of the state.
When it comes to the demographic
picture of this prolific states than it
becomes mandatory to mention that the Figure 9. Haryana (Source: www.haryana.gov.in)
Haryana state is home for a population
of 21,082,989 as per the census data 2001 and recorded a growth of 28.06% between 1991-
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36. 2001 as compared to 21.34% of the national average during the same period. The sex ratio
(number of females per 100 males) declined to 861 from 865 as at the 1991 census. Total
literacy rate has increased from 55.85% to 68.59% in 2001 census.
As per the census total slum population stood as 1420407 and the urban population came out
as 6115304. In terms of fuel usage 1067110 houses use LPG as cooking fuel which is next to
firewood (110529 houses).
The principal cities of Haryana Include names of Faridabad, Panipat, Rohtak, Hisar, Sonipat,
Karnal Yamunanagar, Gurgaon, Bhiwani and Sirsa out of which Faridabad claims of the most
populated city and Panipat and Sonipat stands at third and fifth positions respectively.
Considering the economic and population status of Panipat and Sonipat and the distance
between the spurline and cities they have been selected for the demand estimation of NG in
them.
6.2 PANIPAT
The District is situated 90 km from Delhi (NH-1) on Sher Shah Suri Marg and have
significant place in history of
India. Panipat district was once a
part of district Karnal till 31
October 1989 but then upgraded as
a separate district including
Assandh tehsil of district Karnal. It
was reformed on January 1, 1992
and this time Assandh tehsil was
excluded from the district. Panipat
city is also famous as “City of
weavers” and it has a significant
place in international market for
handloom production. Darri,
carpet mat, table cover, bed sheet,
bed cover curtain etc. produced in
panipat are exported to Canada,
Figure 10. District map of Panipat
Japan, Germany and Australia.
The area of Panipat district is 1268 sq. km. and the total population of the district as per
census 2001 was 967,449 out of which male population accounted for 54% of the total
population. In terms of Agriculture, Panipat district boasts of an agricultural land of
2,664,398 hectare out of which 26,000 hectare of land is cultivated through canal while
77,124 hectare of land is cultivated through tubewell. Panipat district has 25,000 units of
Hand looms and 40,000 units of Pit looms. The total number of Small Industrial Units (SMIs)
in Panipat district was found as 2,899 and 37 large and medium Industrial Units are registered
in Panipat district. Some other Industries which are found in Panipat district are Power loom,
Shoddy spinning Unit, Carpet Industries, Open End Spinning Units, Barrack Yarn spinning
units, Carpet Spinning Units, Pickle Unit, Dying/printing Unit, Weaver Service Centre and
NITRA Lab & Training centre.
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37. The areas developed for Industry in Panipat are as under:
S.No. Name of Estate No. of total plots
1 Industrial Area, Panipat 238
2 Sector 25, HUDA. P‐I, Panipat 162
3 Sector 25, HUDA, P‐II, Panipat 519
4 Sector 29, HUDA. P‐I, Panipat 277
5 Sector 29, HUDA. P‐II, Panipat 670
6 HSIDC, Samalkha 77
Table 17. Industrial estates of Panipat (source: panipat.nic.in)
6.2.1 Panipat Refinery
Located 20 km from the town of Panipat amidst lush emerald fields, India’s most modern
refinery, IOC Panipat Refinery, is located with a capacity of 12 MMTPA. Panipat refinery
was built at a cost of 3,868 crore and fulfils the long felt needs to meet the petroleum demand
of not only Haryana but also the entire north-west of India including Punjab and the states of
Jammu and Kashmir. The best part of the refinery is its ability to control the effluent
discharge rate and keeping it close to zero mark. The refinery has also made significant
contribution in social welfare of the people of Panipat by establishing a township close to
Panipat refinery and hence upgraded the standard of living by making consistent efforts to
raise the bar.
6.2.2 Demand estimation for Industrial Consumers in Panipat District
As per the results of the study carried out by MDRA (Marketing and Development Research
Associate) on behalf of Indian Oil Corp. the total estimated industrial demand for Panipat
district in year 2012-13 stands for 1.3456 MMSCMD of NG out of which three scenarios
(Pessimistic, Real, Optimistic) were predicted. The picture below describes the distribution of
projected industrial demand for 2012-13 presented by the MDRA group.
Figure 11.Estimated industrial demand distribution of NG for Panipat district (Source: MDRA
report)
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38. The above mentioned figure clearly states that Gohana Road Ind. Area is going to have
maximum demand of natural gas in the coming future. After that Asan Ind. Area and Madana
Ind. Area stands for the maximum NG demand potential. The projected demand under
different demand scenarios is :
Scenario Projected NG demand for 2012-13 (in SCMD)
Pessimistic 645911
Realistic 847758
Optimistic 1049605
In the above mentioned scenarios, the conversion rate is calculated as:
• Pessimistic Scenario: 45-59% of total estimated demand projection
• Realistic Scenario: 60-74% of total estimated demand projection
• Optimistic Scenario: 75-89% of total estimated demand projection
Out of the above mentioned scenarios the pessimistic scenario predicts the most likely
demand figures for NG in which National Fertilizer Ltd (NFL) acts as a major contributor to
the estimated industrial demand of Panipat district.
6.2.3 PNG demand estimation for Panipat City
No. of existing customers for Indane 69937
Sale of Indane LPG in last one year (in MT) 9814.427
Per capita consumption 140.3324
Market share of Indane In LPG business (in %) 50
Total domestic LPG demand in one year 19628.85
Total LPG demand in Panipat City8 20446.72
Total demand of NG in SCMD (1 MT LPG= 1250 SCM NG) 70023.00952
Total demand of NG for PNG supply (in MMSCMD) 0.070023009
Expected contribution upto 2012‐13 @10% 0.007002301
Table 18. Estimated PNG demand for Panipat City
6.2.4 CNG demand estimation for Panipat city
Type of No. of Daily average Mileage Total Total Expected
vehicle Vehicle dist. Covered (in consumption consumption of contribution
by vehicle (in km/kg) of CNG in kg NG in SCMD (1kg upto 2012‐
km) per year9 CNG=1.28 SCM 13 @ 10% in
of NG) SCMD
Bus ‐‐‐‐‐‐ 300 4 ‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐
3‐wheeler ‐‐‐‐‐‐‐ 100 40 ‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐
4‐wheeler ‐‐‐‐‐‐‐ 100 21 ‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐
Total ‐‐‐‐‐‐‐‐
Table 19. Estimated CNG demand for Panipat city
8
The total LPG demand in Panipat city is calculated by considering that domestic LPG demand accounts for
96% of the total LPG demand.
9
[(daily avg dist/mileage)*365*no. of vehicle]
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39. 6.3 SONEPAT
Sonepat, located in the south-eastern part of Haryana, came into existence in 1972. Formerly
Sonepat was a part of Rohtak district. The number of sub-divisions of Sonepat is three. They
are Sonipat, Ganaur and Gohana. Among which Sonepat is the largest Tehsil. The town of
Sonipat acts as the district headquarter. The total area of Sonepat is 2,13,080 hectare.
According to the census of 2001, the total population of Sonepat is 12, 78,830, among which
6, 95, 314 are male and 5, 83, 516 female. About 75 % of total population of Sonepat belongs
to the rural part of it while only 25% of the population is considered urban. The major towns
of the Sonepat districts are Sonepat, Kharkoda, Gannaur and Gohana which accounts for
about 25% of the total urban population of the whole Sonepat district. The primary activity of
the people of Sonepat is agriculture.
On the front of industrial growth Sonepat is like a mixed bag of industries. With the
development of HSIIDC in Kundli the industrial growth of Sonepat is supposed to shoot up
in the coming years. Out of the major developing areas of Haryana Sonepat have a special
potential for accelerated socio-economic development.
6.3.1 Industrial demand estimation of NG in Sonepat district
As per the results of the study carried out by MDRA (Marketing & Development Research
Associate) on behalf of Indian Oil Corp. the total estimated industrial demand for Sonepat
district in year 2012-13 stands at 0.427427 MMSCMD of NG out of which three scenarios
(Pessimistic, Real, Optimistic) were predicted which states that the demand will touch the
mark of 0.269278 MMSCMD as per the realistic scenario. The picture below describes the
distribution of projected industrial demand for 2012-13 presented by the MDRA group.
Figure 12. Estimated Industrial demand Distribution of NG in Sonepat District (Source MDRA
Report)
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