City Gas Distribution Business in India

Overview statistics implication challenges opportunity

conclusion

Overview of Natural Gas In India

In the market where so many fossil fuels are available Natural Gas is the one
which is the cleanest. India has currently around 1339.57 billion cubic meters of
natural gas reserves. Natural gas has been dubbed as a “bridge fuel,” a
fossil fuel that could help reduce emissions while other pure fuels are
being researched.

USE
Industrial Use
14%
31% Home Use

Electricity
34%
Consumption
21% Commercial

Where does it come from ?

In India gas is produced from Hazira basin, Mumbai offshore & KG basin and
Assam & Tripura.

Gas Consumption
In 2018-19 gas consumption was 148.02 MMSCFD. Biggest purchasers of natural
fuel are the fertilizer enterprise (27.78%), electricity (22.7%), and the use of
gasoline as a home gas for transportation (16.25%). Natural gas is fed for both
power (60.8%) and non-energy use (39.32%) .
 Natural Gas Network
To satiate India’s energy needs , Petroleum and Natural Gas Regulatory Board
(PNGRB) Act 2006, authority was given to many companies to lay City Gas
Distribution (CGD) network in certain parts of the country.
Regulations have been changed to allow coverage of CGD to 228 GAs spread over
406 districts with potential to cover about 53% of the country’s area and 70% of
country’s population.

Implications to India's gas industry

 Increased gas requirements will result in higher LNG imports in the short to
medium term
 Opportunity for small-scale LNG supply solution, as liquified-to-compressed
natural gas (LCNG) stations development may take place in regions where access
to gas pipeline is not guaranteed
 Control of pollution levels may tighten, as availability of gas will force bans on
polluting fuels across sectors and regions
 Opportunities for investments and partnership for both domestic and
international gas players specifically on infrastructure.
 Whether natural gas has lower life cycle greenhouse gas emissions than coal and
oil depends on the assumed leakage rate, the global warming potential of
methane .
 There’s too much carbon in the natural gas so companies need to find ways how
to curb CO2 production.
Challenges :
Estimated Natural Gas Demand For CGD (All Figures in MMSCFD) in India

50
46
45

40 38

35

30
CNG
24
25 PNG- House hold
20
20 PNG - Industrial
15

10 7
5
5

0
2011 2015 2020

 PNGRB has conducted 4 bidding rounds, wherein 28 Geographic Areas (GA)

were recommend for implementation of CGD. With the current insurance of
CGD in 77 cities and towns, PNGRB envisages to cow additional 300 for CGD in
a phased manner in synchronisation with the commissioning of the pipeline.
 To promote the development of CGD network, the Government has accorded
the priority in domestic gas allocation to PNG (Domestic) and CNG (Transport)
segments. It has been decided to meet 100% gas requirement of CNG (T) and
PNG(D) segments through supply of domestic gas which is cheaper than
imported gas. At present, CGD sector is consuming approx. 14.36 Million
Metric Standard Cubic Meter per Day (MMSCMD) of domestic Gas for CNG
(Transport) and PNG (Domestic) sector.
Opportunity :
On 8.11.2018 PNGRB initiated the 10th CGD Bidding Round which was formally
launched by Hon’ble Prime Minister Shri Narendra Modi on 22.11.2018 at Vigyan
Bhavan, New Delhi.

It covered 50 Geographical Areas (GAs) spread over 14 states and 124 districts
(112 full and 12 part), covering 24% of India’s population and 18% of its area. A
total 225 bids from 25 entities were received .

S. No. Name of Bidder Number of GAs

1 Adani Gas Ltd. 2
2 Bharat Gas Resources Ltd. 2
3 GAIL GAS Ltd. 4
4 GUJARAT GAS Ltd. 6
5 Hindustan Petroleum Corporation 9
6 Indian Oil Corporation 9
7 Indraprastha Gas Ltd. 3

In future, the natural gas demand is all set to grow significantly at a CAGR of 6.8%
from 242.6 MMSCMD in 2012-13 to 746 MMSCMD in 2029-30. The supply of
natural gas is likely to increase in future with the help of increase in domestic gas
production. The contribution to the overall demand from the CGD sector is set to
increase from 6% to 11% during the projected period.
Conclusion
The development of natural gas market as well as infrastructure in India today
needs an enabling environment so that the intended results could be achieved in
the most cost effective manner, in the least possible time and with maximum
benefits to all stakeholders including consumers.

To meet the country’s growing natural gas demand, radical changes should be
made. The market for natural gas in India currently lacks depth with only a small
number of producers (production still largely controlled by the state players),
negligible number of shippers and a fairly limited number of consumers.
Therefore, the market is limited in terms of bilateral contracts between
producers/marketers and consumers of natural gas

It is also imperative to note consuming gas sectors like Power and Fertilizers
which form the anchor load for any gas field or RLNG terminal. The affordability of
these two key user segments depends upon the policy directives and regulatory
reforms in these sectors.