Natural Gas

Summary

Although growth in supply (at 18

per cent CAGR) is expected to
Annual Review June 2009
outpace demand (at 10 per cent
CAGR), the deficit scenario is
likely to continue in the medium
term. Demand growth will be
driven by CGD and captive
power. The sharp growth in
CGD will be on account of
attractive returns coupled with
the development of trunk Contents
pipeline infrastructure.
Meanwhile, the average price of Part A: Attractive returns to lead to unprecedented growth in CGD
Executive summary A-1
gas is expected to increase by
Demand-supply of natural gas A-5
44 per cent to $6.2 per mmbtu
Gas pricing in India A-25
by 2013-14 because of free Project economics of city gas distribution A-31
market-priced gas dominating Player profitability analysis A-37
the supply mix.
Part B: State of the industry
Introduction B-1
Commercial aspects of LNG B-7
Pricing B-13
Regulations B-19
Markets B-31
Natural gas resources B-39
Pipeline and LNG infrastructure B-49
Players B-59
Part C: Industry statistics
Block details: Major players C-1
Block details: Others C-17
CBM: Blocks awarded to NOC's and Pvt/JV companies C-33
Cairn details C-35
NELP Details C-37
Annexure C-47

This document has been prepared by Suhel Kapur, Mayuri Yadav and Sudhir Nair (Head of Research). For any
queries please get in touch with our client servicing desk. (clientservicing@crisil.com. Ph -022-66913561)
 Opinion
Sections

Executive summary A-1

1.0 Demand-supply of natural gas A-5
- Deficit to persist despite higher supply growth A-5
- Demand A-6
- Supply A-14
- Region-wise demand-supply of natural gas A-20
2.0 Gas pricing in India A-25
- Different categories of gas A-26
- Gas volume mix and pricing A-27
- Impact of changing gas mix and increasing price on consumer sectors A-27
3.0 Project economics of city gas distribution A-31
- Process of developing CGD A-31
- Profitability parameters A-32
- Return analysis of a CGD project A-32
4.0 Player profitability analysis A-37
- Regasification business A-37
- Distribution business A-40
- Transmission and trading business A-44

Charts

1.0 Demand-supply of natural gas

01 Map depicting region-wise increase in no. of cities under CGD A-10
02 Map depicting region-wise demand and supply of natural gas A-21

Figures

Executive summary
01 Natural gas supply mix A-1
02 Demand-supply outlook (mmscmd) A-2
03 Current and projected gas demand mix A-3
04 Fuel price comparison of natural gas with alternate fuels A-3

Continued…

CRISIL RESEARCH NATURAL GAS ANNUAL REVIEW A-i

…continued

Figures

1.0 Demand-supply of natural gas

01 Demand-supply outlook A-6
02 Gas demand mix 2008-09 E (139.1 mmscmd) A-7
03 Gas demand mix 2013-14 P (225.9 mmscmd) A-7
04 Fuel price comparison of natural gas with alternate fuels A-9
05 Segment-wise gas demand from CGD A-11
06 Power tariff based on existing fuel costs A-11
07 Capacity additions in captive power A-12
08 Gas supply mix in 2008-09 E (93.2 mmscmd) A-15
09 Gas supply mix in 2013-14 (215.2 mmscmd) A-15
10 Natural gas supply trend A-16
11 Region wise gas demand in 2008-09 E (139.1 mmscmd) A-20
12 Region-wise gas demand in 2013-14 P (225.9 mmscmd) A-20

2.0 Gas pricing in India

01 Exisitng prices of gas in India A-25
02 Auto fuel prices in Mumbai A-30

3.0 Project economics of city gas distribution

01 IRR sensitivity - Proportion of industrial gas demand to total demand A-34

4.0 Player profitability analysis

01 Volumes regasified by PLL A-38
02 Trend in PBIT and PBIT margin A-39
03 Trend in revenue and PBIT A-39
04 Trend in sales composition and realisation A-40
05 Trend in PBIT and PBIT margin A-41
06 Trend in revenue and PBIT A-41
07 Trend in sales composition and realisations A-42
08 Trend in PBIT and PBIT margin A-43
09 Trend in revenue and PBIT A-43
10 Trend in transmission volume and tariff A-44
11 Trend in PBIT and PBIT margin A-45
12 Trend in revenue and PBIT A-45
13 Trend in source-wise gas marketed A-46
14 Trend in PBIT and PBIT margin A-47
15 Trend in revenue and PBIT (trading business) A-47
16 Trend in transmission volume and tariff A-48
17 Trend in PBIT and PBIT margin A-48
18 Trend in revenue and PBIT A-49

continued…

A-ii CRISIL RESEARCH NATURAL GAS ANNUAL REVIEW

…continued

Tables

Executive summary
01 Existing and projected natural gas prices and share in total gas supply A-2
02 Returns for different size of cities A-4

1.0 Demand-supply of natural gas

01 Natural gas - Demand break up A-7
02 Major gas pipelines commissioning over the next few years A-8
03 Region-wise existing and projected cities under CGD A-10
04 Captive power — Region-wise gas based capacity and demand A-12
05 Domestic supply break-up of ONGC and OIL gas fields A-16
06 Finds under various rounds of NELP by entity (as of end-November 2008) A-17
07 Domestic supply break-up of private/JV fields A-18
08 LNG re-gasifiaction capacities in India A-19
09 Region-wise incremental gas supply and demand A-21
10 North India — Sector-wise gas-based capacity and demand A-22
11 South India — Sector-wise gas based capacity and demand A-23
12 East India — Sector-wise gas based capacity and demand A-23
13 West India — Sector-wise gas based capacity and demand A-24

2.0 Gas pricing in India

01 Existing gas volume mix and prices A-27
02 Projected gas volume mix and prices A-27
03 Power sector- Gas-based tariff A-28
04 Cost of generation (based on existing fuel prices) A-28
05 Cost of generation (based on projected fuel prices) A-29

3.0 Project economics of city gas distribution

01 Assumptions A-33
02 Returns for different size of cities A-34
03 IRR sensitivity - Proportion of industrial gas demand-to-total demand at
different price levels of crude oil A-35

CRISIL RESEARCH NATURAL GAS ANNUAL REVIEW A-iii

 State of the Industry
Sections

1.0 Introduction B-1

- Overview B-1
- Product characteristics B-1
- Processes B-3
2.0 Commercial aspects of LNG B-7
- Introduction B-7
- LNG sale and purchase agreement B-7
- Project risks B-9
- Lender's risk B-10
- LNG pricing B-11
3.0 Pricing B-13
- Natural gas B-13
- Gas price linkage with fuel oil B-14
- Pricing structure for a consumer along the HVJ pipeline B-15
4.0 Regulations B-19
- Regulatory and policy environment B-19
- Existing regulatory structure B-19
- Downstream regulations B-20
- Upstream regulations B-24
- Other regulations B-25
- Regulations in the main consuming sectors B-26
5.0 Markets B-31
- Natural gas B-31
- Naphtha B-35
6.0 Natural gas resources B-39
7.0 Pipeline and LNG infrastructure B-49
- Infrastructure development critical towards realising gas potential B-49
- Pipeline infrastructure B-49
- Projects planned by various players B-50
- LNG Infrastructure B-54
8.0 Players B-59
- GAIL (India) Ltd B-59
- Reliance Industries Ltd B-64
- Gujarat State Petroleum Corporation Ltd B-65
- Gujarat Gas Co Ltd B-66
- Indraprastha Gas Ltd B-66
- Mahanagar Gas Ltd B-67
- Adani Group B-67
- International players B-68

Continued…

CRISIL RESEARCH NATURAL GAS ANNUAL REVIEW B-i

…continued

Boxes

6.0 Natural gas resources

01 Reserve classification B-45
02 Coal bed methane B-45

Charts

1.0 Introduction
01 Natural gas processing B-5
02 LNG chain B-5
03 LNG liquefaction process B-6
04 Regasification process B-6

4.0 Regulations
01 Regulatory structure B-19

Figures

3.0 Pricing
01 Domestic gas price since October 1997 B-14

5.0 Regulations
01 Sector-wise domestic consumption of natural gas B-32
02 Domestic consumption of natural gas B-32
03 World consumption of natural gas B-33
04 Domestic naphtha consumption B-36
05 Sector-wise domestic naphtha consumption (PSUs) B-36

6.0 Natural gas resources

01 Natural gas world production B-41
02 Natural gas - Domestic reserves B-43
03 Domestic natural gas production B-44
04 Domestic naphtha production B-44

Tables

1.0 Introduction
01 Composition and characteristics of natural gas B-2
02 Fuel comparison B-2
03 Gas fractions and their use B-3

continued…

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Tables

3.0 Pricing
01 Natural gas prices (1992-1997) B-13
02 Natural gas - Price linkage at 75 per cent B-14
03 Natural gas - Price linkage at 100 per cent B-15
04 Prices for the consumer along HVJ - Old structure (March 2006) B-16
05 Prices for the consumer along HVJ - New structure (effective June 1, 2006) B-16
06 Prices for consumers along HBJ pipeline- (structure effective April 1, 2008) B-17
07 Prices for the consumer along HBJ- (structure effective January 1, 2009) B-17

5.0 Regulations
01 Natural gas country-wise consumption B-33
02 A comparison of hydrocarbons B-37

6.0 Natural gas resources

01 Country-wise reserves of natural gas B-39
02 Natural gas - Pipeline exports B-41
03 LNG exports B-42
04 Natural gas production in India B-43

7.0 Pipeline and LNG infrastructure

01 Company-wise pipeline ownership B-49
02 Existing GAIL natural gas pipelines in India B-50
03 GAIL’s proposed natural gas pipelines in India B-52
04 Existing GSPL natural gas pipelines in India B-53
05 GSPL's proposed pipelines B-53
06 Other proposed pipelines B-54

8.0 Players
01 GAIL - Profile B-62
02 ONGC - Profile B-64
03 British Gas - Profile B-68
04 ExxonMobil - Profile B-68
05 Total Final Elf - Profile B-69
06 Chevron - Profile B-69
07 Royal Dutch/Shell Group - Profile B-70

CRISIL RESEARCH NATURAL GAS ANNUAL REVIEW B-iii

 Industry statistics
Sections

1.0 Block details: Major players C-1

2.0 Block details: Others C-17
3.0 CBM: Blocks awarded to NOC's and Pvt/JV companies C-33
4.0 Cairn details C-35
5.0 NELP Details C-37
6.0 Annexure C-47

Tables

1.0 Block details: Major players

01 BPCL - Block details C-1
02 British Gas Exploration & Production India Ltd - Block details C-1
03 BHP Billiton - Block details C-2
04 GAIL - Block details C-2
05 Geoglobal Resources Ltd (GGR) - Block details C-4
06 Gujarat State Petroleum Corporation Ltd (GSPCL) - Block details C-4
07 GVK Infrastructure Oil & Gas Ltd - Block details C-7
08 Hardy Exploration & Production India Ltd (HEPI) - Block details C-7
09 Hindustan Oil Exploration Co (HOEC) - Block details C-8
10 Hindustan Petroleum Corporation Ltd (HPCL) - Block details C-8
11 Indian Oil Corporation (IOC) - Block details C-10
12 NIKO - Block details C-10
13 Oil India Ltd - Block details C-11
14 ONGC - Block details C-12
15 Reliance Industries Ltd (RIL) - Block details C-15
16 Reliance Natural Resources Ltd (RNRL) - Block details C-16

2.0 Block details: Others

01 Selan Exploration Technology Ltd - Block details C-17
02 Oilex NL - Block details C-17
03 Oilex NL Holdings (I) Ltd - Block details C-17
04 Assam Company Ltd - Block details C-17
05 Canoro Resources Ltd - Block details C-18
06 Ravva Oil Pte Ltd - Block details C-18
07 Essar Oil (EOL) - Block details C-18
08 Essar Energy Ltd - Block details C-18
09 GeoEnpro - Block details C-19

Continued…

CRISIL RESEARCH NATURAL GAS ANNUAL REVIEW C-i

…continued

10 Geopetrol International Inc (GPI) - Block details C-19

11 National Thermal Power Corporation (NTPC) - Block details C-19
12 Birkbeck Investment Ltd (BIL), Mauritius - Block details C-20
13 Jubilant Capital Pvt Ltd (JCPL) C-20
14 Jubilant Securities Pvt Ltd (JSPL) - Block details C-20
15 Jubilant Oil and Gas Pvt Ltd (JOGPL) - Block details C-20
16 Jubilant Energy - Block details C-20
17 Heramec Ltd - Block details C-21
18 ENI India Ltd - Block details C-21
19 Hydrocarbon Resource Development Company (P) Ltd - Block details C-21
20 Interlink Petroleum Ltd - Block details C-22
21 Joshi Technologies Inc (JTI) - Block details C-22
22 Mosbacher India LLC - Block details C-22
23 OAO Gazprom - Block details C-22
24 Okland Offshore Holdings Ltd (Okland) - Block details C-22
25 Tullow India Opn Ltd (TIOL) - Block details C-23
26 Videocon Ltd - Block details C-23
27 Hallworthy (Panama) - Block details C-23
28 Silver Wave (Myanmar) - Block details C-23
29 Tata Petrodyne - Block details C-24
30 Ensearch - Block details C-24
31 JaiPrakash Associates Ltd - Block details C-24
32 Prize Petroleum Ltd - Block details C-24
33 Shiv Vani Ltd - Block details C-25
34 Suntera Resources Ltd - Block details C-25
35 Suntera - Block details C-25
36 Newbury - Block details C-25
37 Focus - Block details C-25
38 Santos International Operations Pty Ltd - Block details C-26
39 Petrogas - Block details C-26
40 Welspun Ltd - Block details C-26
41 Jaycee - Block details C-26
42 Adani Port - Block details C-26
43 Naftogaz - Block details C-27
44 Adani Enterprises - Block details C-27
45 Nitinfire (New Delhi) - Block details C-27
46 BP Exploration (Alpha) Ltd - Block details C-27
47 Adani Welspun Exploration Ltd - Block details C-27
48 Deep Energy LLC - Block details C-28
49 Deep Industries Ltd - Block details C-28
51 Savla Electronics Pvt Ltd - Block details C-28
52 Essar Exploration Private Ltd - Block details C-28
53 Nobel Energy International Ltd - Block details C-28
54 Moonstone Energy Pvt Ltd - Block details C-28

Continued…

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…continued

55 Mercator Petroleum - Block details C-29

56 HPCL Mittal Energy Ltd - Block details C-29
57 Omkar Natural Resources Pvt Ltd - Block details C-29
58 Quest Petroleum Pvt Ltd - Block details C-29
59 Quippo Oil & Gas Infrastructure Ltd - Block details C-30
60 SREI Infrastructure Finance Ltd - Block details C-30
61 Vectra Investment Pvt Ltd- Block details C-30
62 Primera Energy Resources Ltd - Block details C-30
63 Vasundhra Resources Ltd - Block details C-30
64 Bengal Energy - Block details C-31
65 JSPL Oil & Gas - Block details C-31

3.0 CBM: Blocks awarded to NOC's and Pvt/JV companies

01 CBM: Blocks awarded to national oil companies, private and joint
venture companies C-33

4.0 Cairn details

01 Cairn Energy: Block details C-35
02 Cairn India Ltd: Block details C-36

5.0 NELP Details

01 Details of exploration rounds (pre-NELP) C-37
02 Development rounds C-37
03 Exploration blocks awarded under NELP-I C-38
04 Exploration blocks awarded under NELP-II C-39
05 Exploration blocks awarded under NELP-III C-40
06 Exploration blocks awarded under NELP-IV C-41
07 Exploration blocks awarded under NELP-V C-42
08 Exploration blocks awarded under NELP-VI C-43
09 Exploration blocks awarded under NELP-VII C-45

6.0 Annexure
01 List of abbreviations C-47

CRISIL RESEARCH NATURAL GAS ANNUAL REVIEW C-iii