Power sector analysis The power sector is going to be the major sector providing the anchor demand for

natural gas.The ministry of Power has set a target 70,000 MW generation for the 5 year ending 2012, the terminal year of the 11th of plan.The current thermal power generation is about 90,800 MW, of which12 % (10,900 MW) is gas based.The gas based power plants which would definitely be coming up during the 11th plan period have a capacity of 1889.2 MW; the requirement of gas for the same is likely to be 7.5 MMSCMD.Apart from these, the Ministry of Power expects 26 power plants with a total capacity of 31765.5 MW to be coming up in the 11th and the 12th plan periods.On an optimistic note, 40% of these plants would be gas-based; this would come to roughly 12700 MW, requiring around 50.82 MMSCMD gas. The present requirement of gas for the existing gas based power plants is 68.19 MMSCMD.Adding gas requirement of 7.50 MMSCMD and 50.82 MMSCMD, as explained in the above para, the total gas requirement by the end of the 11th plan is likely to be 126.57 MMSCMD. Assuming that the gas requirement increases equally every year, the projected gas demand estimate is given below: 2007-08 Gas Demand (MMSCMD) 79.7 2008-09 91.2 2009-10 102.7 2010-11 114.2 201112 126.57

Fertilizer sector analysis It has been well established that the natural gas is the most cost effective fuel vis--vis other liquid fuels in the fertilizer sector. During the year 2004-05, the gas based fertilizer (urea) production accounted for 66 % of the total fertilizer production. Naptha and FO/LSHS based production accounts for the balance 34 %.At the same time, the % subsidy share of gas based production is 38 % compared to the share of the 62 % for the liquid feedstock. This is essentially due to the cost effectivekness of gas vs other feedstock. Keeping this in view, Department of Fertilizers has proposed the case for switch over to 100 % natural gas in the fertilizer sector, which is expected to give push to gas demand in this sector during the 11th five year plan. Based on this promise, the estimated urea demand and the corresponding gas demand for the 11th plan period is given below: 2007-08 Urea Demand( Lakh Tonnes) Gas Demand (MMSCMD) 249.51 40.82 2008-09 257.09 42.65 2009-10 264.88 52.24 2010-11 272.92 79.36 201112 281.23 79.36

Purely, looking at it from the point of view of projected gas availability from the existing source for the fertilizer sector, there is an expected progressive decline from the existing sources from about 27

MMSCMD in 2007-08 to a level of about 18 MMSCMD in 2011-12. Given the growth in the expected demand in the 11th plan period for the gas in fertilizer sector, the gas shortfall could increase from 200MMSCMD in 2007-08 to a level of about 60 MMSCMD in 2011-12.In this context, the gas supplies from the domestic sources would have to grow fast to meet the increasing demand in this sector. Petrochemical/Refineries/Internal Consumption and Sponge Iron/Steel and other Industries The current demand as per the current industry estimates in the Petrochemical/Refineries/Internal Consumption (of Gas Industires) sectors is about 25.37 MMSCMD in 2005-06.These industries are estimated to grow in line with the economic growth.Hence the annual growth rate of about 7 % is assumed during 11th plan period, which would result in a demand of 33.25 MMSCMD by the terminal year of the 11th plan. Similarly, the sponge iron/steel sector is also expected to grow at the same rate of 7 % from the current level of 6 MMSCMD, reaching a level of 7.86 MMSCMD by the terminal year of the 11th plan. Based on the above analysis, the consolidated demand estimate is presented below: 2007-08 79.70 40.82 12.08 15.00 25.37 6.00 178.97 2008-09 91.20 42.65 12.93 16.05 27.15 6.42 196.30 2009-10 102.70 52.24 13.83 17.17 29.05 6.97 221.86 2010-11 114.20 79.36 14.80 18.38 31.08 7.35 265.16 2011-12 126.57 79.36 15.83 19.66 33.25 7.86 282.55

Power Fertilizer City gas Industrial Petrochemical/Refineries/Internal Consuption Sponge iron/steel TOTAL

Upstream segment annual natural gas production Total production of natural gas stood at 47.5 BCM in 2009-10 44.6 per cent more than the previous years production (32.9 BCM). The demand for domestic gas was estimated at 226 MMSCMD in 200910, whereas gas supply was 163 MMSCMD. ONGC accounted for 48.6 per cent (23.1 BCM) of total natural gas production during the year. Private/JV fields accounted for 46.3 per cent of total natural gas production This was mainly due to commencement of gas production at Reliances KG basin. Total production of natural gas is expected to reach 255.3 BCM by the end of the Eleventh Plan period.