Professional Documents
Culture Documents
PROJECT REPORT ON
INDIAN GAS MARKET
SUBMITTED BY
MANISHA GORAKSHA
FOR THE POST GRADUTION OF
MBA IN INTERNATIONAL BUSINESS
PG NO
TOPIC
EXECUTIVE SUMMERY
OBJECTIVE
RESEARCH METHODOLOGY
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GAS PRICING
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10-20
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ACKNOWLEDGEMENT
As we know that for reward efforts is necessary and for efforts motivation
is necessary same is with the success of this project .It would not have been
possible without to
Management
for providing me
Declaration
I hereby declare that the report titled Indian gas marketopportunities and challenges is a record of an independent work carried
out by me as part of the summer internship, at the Corporate Marketing
Group of ONGC, during the period 11st May, 2009 to 8th July, 2009, under
the supervision and guidance of Mr Mr Patwardhan, Senior Engineer
(Production) - Marketing..
.
The information contained herein is true and original, to the best of
my knowledge.
Manisha.j.goraksha
Management Trainee - ONGC
MBA- II [Marketing]
CERTIFICATION
_______________________
hereby
certify
that
MISS
___________________________
Mr. Patwardhan,
Senior Engineer (Production) Marketing.
( Project Guide)
Dated : ________________
EXECUTIVE SUMMERY
This profile is the essential source for top-level energy industry data and
information. The report provides an overview of each of the key sub-segments of
the energy industry in India. It details the market structure, regulatory
environment, infrastructure and provides historical and forecasted statistics
relating to the supply/demand balance for each of the key sub-segments. It also
provides information relating to the oil and gas assets (oil and gas fields,
exploration blocks, refineries, pipelines, LNG terminals and storage terminals) in
India. The report also analyses the fiscal regime relevant to the oil and gas assets
in India and compares the investment environment in India with other countries
in the region. The profiles of the major companies operating in the oil and gas
sector in India together with the latest news and deals are also included in the
report.
OBJECTIVE
Ensuring adequat availability of natural gas for consumers;
Encouraging new delivery methods like LNG and transnational pipelines;
Attracting substantial private investment in the natural gas sector;
Introducing the latest technological standards in different elements of the natural gas
chain;
Ensuring sustainable development of the countrys hydrocarbon reserves; and
Encouraging competitive terms for supplies to downstream users.
_ Consumption growth (1978-2007): 12% p.a.
_ Production growth (1978-2007
RESEARCH METHODOLOGY
Survey done by preparing the questionnaire for consumer to know
there response
PRIMARY DATA
A set of 10 questions were prepared and distributed among 30
consumers.(sample size-30)
www.mouthshut.com,
Pngrb.com
,www.ibef.com
\,bing.com,
google.com.
newspapers
10
23%
Petroleum
Lpg
Naptha
Bio-diseal
77%
11
50%
50%
12
YES
NO
13
Interpretation-I found that 83% consumer agreed with the fact that
consumption pattern of the gas is changing rapidly and 17% were
found to be disagree with the statement asked
14
23%
YES
NO
77%
16
40%
311 RS
60%
350 RS
17
30%
33%
Petroleum
Lpg
Naptha
0%
Bio-diseal
37%
18
33%
YES
NO
67%
19
50%
50%
20
YES
NO
Scope
Historic and forecast data relating to production, consumption, imports, exports and
reserves are provided for each industry sub-segment for the period 1995-2020.
Historical and forecast data and information for all the major exploration blocks, oil
and gas fields, refineries, pipelines, LNG terminals and storage terminals in India for
the period 1995-2020.
Operator and equity details for major oil and gas assets in India
Key information relating to market regulations, key energy assets and the key
companies operating in the India's energy industry.
Detailed information on key fiscal terms (such as rents, bonuses, royalty, cost
recovery, profit oil, petroleum and corporate taxes) pertaining the geography is also
provided. A sample calculation detailing how fiscal terms apply to a typical asset in
the regime is included.
Information on the top companies in the India including business description,
strategic analysis, and financial information.
The report Indian Oil & Gas Industry: An Industry Analysis provides an objective
analysis on the Oil & Gas sector in India along with detailed information on the
exploration, production and other processes. Annual consumption figures and future
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growth projections are also included in this report. It gives a detailed overview of the
opportunities, challenges and critical success factors for the growth of the industry.
key findingsIndia, in 2004-2005, met 75 %of its crude oil demand through imports. The domestic
production of crude oil has been in the range of 30-34 Million Metric Tons from 20012005. About 60 % of its crude import is from Middle East.
-The consumption of natural gas grew at a CAGR of 2.7 % in the period 1999-2005,
supported by rise in availability through domestic and imported sources of gas.
-Oil comprises 36 % of Indias primary energy consumption in 2005, and is expected to
grow both in absolute and percentage terms driven by overall economic growth. Growth in
demand is expected to catapult the overall demand to 196 Million Metric Tons in 20112012 and 250 Million Metric Tons in 2024-25.
- Demand for oil is expected to grow from 119 Million Tons Oil Equivalent (MTOE), from
2004, to 250 MTOE, during 2025, at an annual growth of 3.6%. During the same period
domestic production from existing developed reserves is expected to grow at
approximately 2.5 %.
-Natural gas comprises 9 % of Indias primary energy consumption at present and it will
be 14% of energy mix by 2010. Demand for natural gas is also likely to increase at an
annual growth rate of 7.3%.
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Ranked as the 2nd biggest E&P company (and 1st in terms of profits), as per the Platts
Energy Business Technology (EBT) Survey 2004.
Leads the list of Indian companies listed in Forbes 400 Global Corporates and
Financial Times Global 500 by Market Capitalization.
Holds largest share of hydrocarbon acreages in India. Strategic Vision 2001- 2020 :
To focus on core business of E&P, ONGC has set strategic objectives of:
Doubling reserves
The focus of management will be to monetise the assets as well as to assetise the money.
Mission :
SWOT ANYLISIS
Oil & Natural Gas Corporation Limited - SWOT Analysis Company Profile is the essential
source for top-level company data and information. The report examines the companys key
business structure and operations, history and products, and provides summary analysis of its
key
revenue
lines
and
strategy.
Oil and Natural Gas Corporation (ONGC) is engaged in the exploration, production, refining,
transporting and marketing of crude oil, natural gas, liquefied petroleum gas, natural gas liquid,
ethane, propane and other products. The company primarily operates in India and has a presence
in 14 foreign countries through its overseas arm, ONGC Videsh (OVL). It is headquartered in
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Dehradun, India and employs about 34,722 people. The company recorded revenues of
INR862.7 billion (approximately $19.9 billion) during the fiscal year ended March 2007, an
increase of 16.3% over 2006. The operating profit of the company was INR277.7 billion
(approximately $6.4 billion) during fiscal year 2007, an increase of 15.7% over 2006. The net
profit was INR177.7 billion (approximately $4.1 billion) in fiscal year 2007, an increase of
15.4% over 2006.The company has not published it annual report for 2006-07 during the the
publication of the profile.
Scope
- Provides all the crucial company information required for business and competitor intelligence
needs
- Contains a study of the major internal and external factors affecting the company in the form
of a SWOT analysis as well as a breakdown and examination of leading product revenue
streams
- Data is supplemented with details on the companys history, key executives, business
description, locations and subsidiaries as well as a list of products and services and the latest
available
company
statement
Reasons
to
Purchase
prospective
partners
and
suppliers
- Keep fully up to date on your competitors business structure, strategy and prospects
- Obtain the most up to date company information available
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HISTORY
ONGC - Oil and Natural Gas Corp Ltd, leading National Oil GAS exploration
Company
of
India
Oil and Natural Gas Corporation, ONGC, was set up in 1956 with significant
contribution in industrial and economic growth of the country, ONGC is a leading
National Oil Company of India engaged mainly in exploration, development and
production of crude oil, natural gas and some value added products. ONGC was
subsequnely converted into a public limited company in Jun.'93 following new
liberalized economic policy adopted by the Government of India in July, 1991
sought to deregulate and delicense the core sector (including petroleum sector)
with partial disinvestment of Govt. Equity in Public Sector Undertakings and other
measures. ONGC is India's largest producers of Crude Oil, Natural Gas and LPG.
ONGC India also produce other value added petroleum products such as NGL,
C2-C3, Aromatic Rich Naptha and Kerosene. Internationally, its wholly owned
subsidiary ONGC Videsh Limited has a number of existing and upcoming interests
in selected oil patches ONGC including development of a large gas field
discovered by it in Vietnam offshore. During March, 1999, ONGC, Indian Oil
Corporation (IOC) a downstream giant and Gas Authority of India Limited (GAIL)
the only gas marketing company, agreed to have cross holding in each other's
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stock to pave the way for long-term strategic alliance amongst themselves, both
for the domestic and overseas business opportunities, in the energy value chain.
After independence, the national Government realized the importance
of oil and gas for rapid industrial development and its strategic role in
defense. Consequently, while framing the Industrial Policy Statement of
1948, the development of petroleum industry in the country was
considered to be of utmost necessity
1955 -
ONGC Evolution
Oil and Gas Directorate, Govt Of
India
Oil and Natural Gas Commission
Autonomous statutory Body
Public Lim
ited Company
1997 A Navratana PSU
2000 A Flagship Oil PSU
offshore
remained
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largely
unexplored.
but
also
established
new
oil
This
discovery,
along
with
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30
PSUs, 10.47
FIIs, 9.47
Mutual Funds,
1.11
Public, 1.68
Others, 0.42
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After the transfer of business of the erstwhile Oil & Natural Gas Commission to that of Oil
and Natural Gas Corporation Limited in 1993, the Government disinvested 2 per cent of its
shares through competitive bidding. Subsequently, ONGC expanded its equity by another
2 per cent by offering shares to its employees.
During March 1999, ONGC, Indian Oil Corporation (IOC) - a downstream giant - and Gas
Authority of India Limited (GAIL) - the only gas marketing company - agreed to have
cross holdings in each other's stock.
This paved the way for long-term strategic alliances both for the domestic and overseas
business opportunities in the energy value chain amongst themselves. Consequent to this,
the Government sold off 10 per cent of its share holding in ONGC to IOC and 2.5 per cent
to GAIL. With this, the Government holding in ONGC came down to 84.11 per cent.
In the year 2002-03, after taking over MRPL from the A V Birla Group, ONGC diversified
into the downstream sector. ONGC has also forayed into retailing business, though in a
limited manner. ONGC has also entered the global field through its subsidiary, ONGC
Videsh Ltd. (OVL) and has presence in 15 countries. ONGC, today, is committed to secure
energy independence for the Nation.
Peformance Highlights (2005-06)
Hydrocarbon Finds 10
Crude Oil
24.404 MMt
Gas Production
22.574 BCM
Gas Sale
18.226 BCM
VAPs
3.425 MMt
Drilling
270 wells
Operating Revenue Rs 50556 Cr
Net Profit
Rs 14431 Cr
Net Worth
Rs 53593 Cr
Manpower
34722
Technical 23878
Non-Technical 10844
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MARKETING IN ONGC
Historically ONGC has had a limited role in marketing its liquid products. The
marketing of crude oil since the early 70s was under total control of the
Government and ONGC had little leeway since the price, mode and consumers
were all pre-determined by the Government. The pricing of crude oil and liquid
products was administered by the Government as per the Administered Pricing
Mechanism (APM).
Mid 80s Marketing department was headed by GM (Mktg.) based at Delhi with
marketing officers stationed in all regions, mainly looking after marketing of gas.
1992 Transfer of gas marketing functions to GAIL, and there being no perceptible
role in marketing, either liquid or gaseous products of ONGC, the existing
marketing organization was dismantled.
Early 80s ONGC started producing other value added liquid products like LPG
and NGL, SKO, HSD etc. However, these products also formed part of product
profile of the refineries and again ONGC had virtually no role to play since
marketing of these products was also dealt in a manner similar to that of crude oil.
60s to mid 80s ONGC, however, played a pioneering role from the 60s in the
marketing of gas involving activities such as identifying consumers, determining
gas prices, entering into contracts, their administration, effecting supplies, etc.,
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without any intervention by the Government till the mid 80s and was able to
convert gas business to a large extent, initially from BUYER'S market to
SELLER'S market. The 80s also witnessed an accelerated development of
offshore fields including Bassein and Bombay High and setting up of gas
processing complexes at Uran and Hazira, which considerably increased the
volumes of gas sales by ONGC.
The Great Separation - Gas Authority of India Ltd. (GAIL) was created in 1984 to
construct and operate the Hazira Vijaipur - Jagdishpur (HBJ) pipeline and distribute gas
along the pipeline route. However, with strategic focus, GAIL could convince the
Government to intervene in the gas industry and subsequently succeeded in becoming the
nodal agency for transportation and marketing of gas throughout India. During the late
80s, ONGC attempted to resist moves by Government / GAIL to hand over the marketing
functions to GAIL. Ultimately, ONGC had to give in when a government order, issued
during mid 1992, transferred the gas marketing functions and related assets of ONGC,
built over nearly three decades by the sweat of ONGCians, to GAIL. GAlL has since
benefited to a large extent from its monopoly position in the gas market, at ONGC's
expense
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PRODUCT LINE
ONGC DEALING WITH
SOME ESSENTIAL
PRODUCTS
ONGCS SHARE IN
DOMESTIC OIL & GAS
PRODUCTION (2005-06)
CRUDE OIL:
81.5%
NATURAL GAS: 79.2%
Till July 1981, ONGCs activities were focused on E& P business. The
first Gas-based LPG recovery plant at Uran was commissioned on 31 st
July 1981. With this, ONGC entered into business of LPG, NGL/Naphtha.
Thereafter, a number of similar plants were commissioned at Hazira,
Uran, Ankleshwar & Gandhar. Currently, besides crude oil & gas, ONGC
produces LPG, Naphtha/NGL, LAN/ARN, C 2-C3, SKO, HSD, LSHS, etc.
ATF production at Hazira has commenced from 11.03.2007.
SR NO
1
2
3
4
5
6
7
8
9
10
11
12
PRODUCTS
CRUDE OIL
NATURAL GAS
LPG
ETHANE-PROPANE (C2-C3)
AROMATIC RICH NAPTHA (NGL)
KEROSENE (SKO)
HIGH SPEED DIESEL(HSD)
LAN/ARN
LOW SULPHUR HEAVY
STOCK(LSHS)/FURNANCE OIL
MOTOR GASOLINE
AVIATION TURBINE FUEL(ATF)
HC
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With the promise of KG basin gas just a few months away, the country seems to
be at the threshold of a revolution that might transform the energy sector. The
country's gas supply is expected to double in thecoming years and the industry is
agog with expectation of it bringing in an era of clean energy.
The favourable climate for gas has been further enhanced by a steep rise in
international oil prices with expectations of it continuing to remain high. This has
woken up policy makers to the potential for gas as a substitute for transportation
and domestic fuel, which currently form a significant part of the oil marketing
companies' under recoveries
The Indian natural gas industry is continuing its rapid pace of reforms with the
conclusion of the most successful international bidding under the seventh round of
the New Exploration Licensing Policy and the notification of city gas distribution
(CGD) regulations earlier this year.
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Largest contributor to the national exchequer in 2004-05 with taxes amounting to US$ 27
billion.
Oil & Gas constituted 40 per cent of primary energy source in 2004.
India is sixth largest crude oil consumer in the world with consumption at 119.3 MMT in
2004.
Petroleum, Oil Lubricants (PoL) imports is 28 per cent of the total imports of India and
PoL exports is 8 per cent of total exports for 2004-05.
All five Indian companies appearing on the Fortune 500 list operate in the Oil & Gas
sector.
India is Ninth largest crude oil importer in the world.
India ranks sixth in refining capacity in the world with capacity at 2.5 million barrels of
oil per day in 2004 which is 3 per cent of the worlds refining capacity.
Reliance Industries Ltd (RIL) in India is the third largest refinery in the world with a
capacity of 33 MMTPA.
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In view of the need to create gas sector infrastructure for sustained development of gas
markets across the country, Gas Authority of India (GAIL), now known as GAIL (India)
Limited, was set up by Government of India on August 16, 1984 with the responsibility to
develop pipelines and to process, market and plan the optimum utilization of natural gas,
thereby enabling OIL and ONGC to concentrate on the exploration and production of
hydrocarbons in India. Prior to the formation of GAIL, approximately 725 km of local
regional pipelines were constructed and operated by ONGC, apart from around 320 km of
pipeline laid by various customers. In 1986, work began on the Hazira-BijaipurJagdishpur (HBJ) gas transmission line linking the gas sourced from Bassein fields landing
at Hazira in Gujarat with fertilizer, power and industrial consumers in Gujarat, Rajasthan,
Madhya Pradesh and Uttar Pradesh. In 1987-88, the countrys first crosscountry, 1700 km
long, 18.2 MMSCMD capacity HBJ pipeline system was successfully commissioned by
GAIL in 22 months,14 months ahead of schedule. Today, GAIL is the national gas
company in India with a ready-built infrastructure for transmission and marketing of
natural gas over long distances in the country. GAIL owns and operates around 4,500 km
of pipeline which currently transports over 22 BCM of natural gas every year. The most
prominent pipeline of GAIL is the 2,700 km HBJ pipeline which has a capacity to handle
33.4 MMSCMD of natural gas.
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gas supplies and development of pipeline infrastructure, the gas markets would develop
further, thereby benefiting the customers and the country
Gas pricing
Pricing Mechanism (APM), for petroleum products. This system is based on the retention
price concept under which the oil refineries, oil marketing companies and the pipelines
are compensated for operating costs and are assured are turn of 12 per cent post-tax on the
net worth. Under this concept, a fixed level of profitability for the oil companies is
ensured, subject to their achieving their specified capacity utilisation. The administered
pricing policy of petroleum products ensures that products used by the vulnerable sections
of the society, like kerosene, or products used as feedstock for production of fertiliser, like
naphtha, may be sold at subsidised prices. The APM was dismantled in April
2002.Gradually, the Government of India has moved to market-determined, tariff-based
pricing. Free imports are permitted for almost all petroleum products, like kerosene, LPG
and lubricants, except petrol and diesel. It is contemplated that, all administered price
products will be taken out of the administered pricing regime in a phased manner and the
system will be replaced by a progressive tariff regime. On the pricing front, the
government-appointed committee on pricing and taxation of petroleum products, has
recommended that the oil companies should shift from an import parity based pricing to
a trade based pricing. It has also suggested, the reduction in custom duties on petrol and
diesel from 10 per cent to 7.5 per cent and the shifting of excise duty from an ad-valorem
levy, to a specific levy.
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1. Prior to 1987, gas prices were fixed by ONGC/OIL. The price is being fixed by
Government w.e.f. 30.1.1987. The price of APM gas of ONGC and OIL was last
revised effective 1.7.2005.
The salient features of the revised pricing order effective 1.7.2005 are as follows:-
i.
ONGC and OIL produced about 55 MMSClMD APM gas from nominated
fields. The determination of producer price for this gas will be referred to
the Tariff Commission. Till the Commission submits its recommendation
and a decision is taken thereon, the consumer price of APM gas will be
increased from Rs.2850/MCM to a fixed price of Rs. 3200/MCM on adhoc
basis.
ii.
It has been decided that all available APM gas would be supplied to only
the power and fertilizer sector consumers against their existing allocations
along with the specific end users committed under Court orders/small scale
consumers having allocations upto 0.05 MMSCMD at the revised price of
Rs. 3200/MCM. This price is linked to a calorific value of 10,000
K.cal/cubic metre. However, the gas price for transport sector (CNG),
Agra-Ferozabad small industries and other small scale consumers having
allocations upto 0.05 MMSCMD would be progressively increased over the
next 3 to 5 years to reflect the market price.
iii.
iv.
The price of gas for the North-Eastern region will be pegged at 60% of the
revised price for general consumers. Thus, the consumer price for the
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Natural Gas
Natural gas is a highly flammable hydrocarbon gas consisting chiefly of methane (CH4).
Although methane is always the chief component, it may also include other gases such as
oxygen, hydrogen, nitrogen, ethane, ethylene, propane, and even some helium.
The gas is found entrapped in the earth's crust at varying depths beneath impervious strata,
such as limestone, and may or may not be in association with oil. If oil is present it is
called wet gas, else dry gas.
Natural gas is a colorless, odorless fuel that burns cleaner than many other traditional
fossil fuels. Natural gas is used for heating, cooling and production of electricity besides
for various other industrial purposes. The principal constituents of natural gas are Methane
and Ethane, but most gases contain varying amounts of heavier hydrocarbons that may be
removed by processing. In India, the C3 and C4 fractions of natural gas are usually
recovered in a Liquefied Petroleum Gas (LPG) fractionator plant for making LPG.
Typically, a 1:1 Propane-Butane mix on mass basis is used for making LPG in India. After
the recovery of the Propane and Butane fractions from the rich gas stream, the stream of
gas downstream of LPG recovery Plant (known as lean gas) is returned to the pipeline
system. While all fractions of the rich gas can be as such used by fertilizer and power
plants as feedstock or fuel respectively, the value added to the C2, C3, C4, C5 and heavier
fractions is greater when they are used for the production of LPG or when C2 and C3 is
used for the production of petrochemicals. The removal and separation of individual l
hydrocarbons by processing is possible because of the differences in their physical
properties. As each component has a distinctive weight, boiling point, vapor and physical
characteristics, its separation from other components is a relatively simple physical
operation. Natural gas may also contain moisture, Hydrogen Sulfide, Carbon Dioxide,
Nitrogen, Helium, or other components that may be diluents and/or contaminants. Natural
gas is processed to remove unwanted water vapor, solids and/or other contaminants that
would interfere with pipeline transportation or marketing of the gas. Liquefied Natural Gas
LNG is nothing but natural gas reduced to a liquid State by cooling it to -161C. Once
48
liquefied, the natural gas is more compact occupying 1/600th of its gaseous volume.
Natural gas is liquefied because in gaseous form it is extremely voluminous and cannot be
transported to long distances as gas fields are far-off from the user market. Liquefied
form eliminates the need for more room for gas transportation. LNG is transported in
special tankers and brought to the receiving regasification terminal in another location. It is
regasified at the terminal itself and transported through a pipeline.
Natural Gas meets many of the requirements for fuel in a modern day industrial society. It
is efficient, clean burning fuel, eco friendly and has flexibility of control.
The key uses are:
Electricity generation by utilities : Fuel for base load power plants and for use in
combined cycle/co-generation power plants.
Public and commercial : LNG is clean fuel for use as is piped Gas in household.
Economically cheaper as compared to LPG. In fact most of the Western Countries use
piped gas in houses. The household use of piped gas is expected to increase in future.
Industrial : As an under boiler fuel for steam raising and heating applications.
Alternative Motor fuel to diesel: With only one carbon and four hydrogen atoms per
molecule, natural gas is the cleanest burning fossil fuel. Moreover, it has 30 to 40 % higher
fuel efficiency for running motor vehicles. Due to environmental considerations, the use of
natural gas in Automotive Sector is bound to increase considerably on account of higher
efficiency and being a cleaner fuel.
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50
51
place and are estimated to support a gas production rate of 20-40 MMSCMD. Commercial
production in India is expected to commence by 2006-07.
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Natural Gas
Being a gaseous fuel, very clean compared to any other fuel with more than 94%.
Combustible particles.
PNG is versatile
Apart from cooking, other appliances like geyser, air conditioner, vehicles etc. can
be used on Natural Gas. However, please do not attempt to alter/modify the
existing installation yourself or through any unauthorized person. Please call 1917
for assistance.
Clean fuel
Very low levels of pollution
Cheap fuel
Far more economical than use of petrol
Drivers of CNG
Economics:
On an energy-equivalent basis, natural gas costs considerably lower than the LPG,
Gasoline and Diesel. Natural gas is a clean-burning fuel that reduces vehicle maintenance.
An added advantage is that unlike liquid fuels, gas can not be adulterated or siphoned-off
from a vehicle which is a major concern area with Petrol an and Diesel. However, certain
fiscal support or incentives may be required for inducing switchovers and conversions.
Emissions:
Exhaust emissions from CNG vehicles are much lower than those from petrol or diesel
powered vehicles. For instance, CNG emissions of carbon monoxide are approximately
70% lower, non-methane organic gas emissions are 89% lower, and oxides of nitrogen
emissions are 87% lower.
In addition, CNG also emits significantly lower amounts of greenhouse gases and toxins
than do petrol vehicles.
Safety:
Vehicles that run on clean burning natural gas are as safe as vehicles operating on
traditional fuels such as petrol and diesel. Being lighter than air, CNG, unlike gasoline,
dissipates into the atmosphere in the event of an accident. CNG fuel systems are sealed,
which prevents any spills or evaporative losses.
Also, natural gas is not toxic or corrosive and will not contaminate ground water
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55
distributorships. During the year 2004-05, OMCs had released about 73 lakh new
LPG connections and commissioned 675 LPG distributorships.
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58
Specific equipment imported for oil and gas exploration or exploitation has been
exempted from customs duty.
A new Petroleum Tax Code, based on similar codes in existence in more mature
markets to provide a fair basis of taxation and which promotes private investment in
the sector.
The model Production Sharing Contract for exploration provides that capital
expenditures incurred in respect of exploration and drilling operations are fully
tax-deductible.
Attractive terms are being offered to investors for the construction of liquefied NG
import terminals.
Duty on petroleum products has been reduced to 7.5% from 10%.
No Customs & excise duty on LPG & Kerosene.
Present Crude oil customs duty has been reduced to 5%.
59
The production of natural gas went up to 32.27 billion cubic metres tonnes (BCM)
in 2007-08, from 31.74 BCM in 2006-07.
Consumption
60
India's domestic demand for oil and gas is on the rise. As per the Ministry of Petroleum,
demand for oil and gas is likely to increase from 176.40 million tonnes of oil equivalent
(mmtoe) in 2007-08 to 233.58 mmtoe in 2011-12.
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Downstream
Gradual shift to non-APM gas pricing
Linking Indian gas market to international gas markets
Promotion of pipeline as the preferred infrastructure
Subsidy on petroleum products distorting the market burden on oil
companies due huge under-recoveries
Continued subsidy on SKO and LPG
High incidences of duties and state taxes on transportation fuels
Falling financial viability of petroleum retail outlets due to unplanned
expansion of retail outlet networks, marginal increase in volume growth,
spiraling real estate prices and high prevalence of adulteration activities
Key challenges being faced by the Oil & Gas sector in India at the present
time are - rising demand by the fast growing economy, securing energy
supply, technology upgradation and developing skill.
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impact on consumers.
Effectively target the subsidies for kerosene and LPG to BPL (below poverty
line) families.
Policies enhancing penetration of gas for meeting energy requirements on a
pan-India basis
Extending tax holidays to local Gas Distribution Networks
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