DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY

VISAKHAPATNAM, INDIA

SUBJECT

ECONOMICS

PROJECT TITLE

ECONOMIC AND LEGAL ANALYSIS ON COOKING GAS

NAME OF THE FACULTY

Mr. ABHISHEK SINHA

NAME OF THE CANDIDATE

D.SUMANTH

ROLL NUMBER

18LLB120

SEMESTER – 2

1|Page
 ACKNOWLEDGEMENT

I want t0 express my gratitude t0 respected Abhishek Sinha Sir, wh0 gave me this very g00d
0pp0rtunity t0 research 0n Ec0n0mic and legal analysis 0n c00king gas, which helped me in
studying hist0ry and 0rigin 0f c00king gas and ab0ut vari0us ec0n0mic and legal aspects
regarding c00king gas.

Sec0ndly, I w0uld like t0 thank the team DSNLU, wh0 pr0vided me assistance thr0ugh vari0us
0nline res0urces t0 acc0mplish this pr0ject.

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 TABLE OF CONTENTS:

 Introduction…………………………………………………………………….. 1
 Uses of LPG………………………………………………………………….…. 2
 Historical background of cooking gas……………………………………….. 7
 Crude oil scenario in India…………………………………………………….. 8
 Conceptual framework ……………………………………………………..…. 10
1. Upstream sect0r……………………………………………………….……. 10
2. Downstream sector………………………………………………………….. 11
3. Midstream sector……………………………………………………….…... 11
 Consumer behavior in cooking gas ………………………………………….… 11
 Production Process of Cooking gas………………………………………..…... 13
 Market for cooking gas………………………………………………………… 14
 Others factors contributing to cooking gas……………………………………..17
 LPG subsidy in India…………………………………………………………... 18
 Legal issues on cooking gas……………………………………………………. 19
 Conclusion………………………………………………………….……………20
 Bibliography……………………………………………………………….........21

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INTRODUCTION:

Liquefied petr0leum gas 0r liquid petr0leum gas, als0 referred t0 as simply pr0pane 0r butane,
are flammable mixtures 0f hydr0carb0n gases used as fuel in heating appliances, c00king
equipment, and vehicles. It is increasingly used as an aer0s0l pr0pellant[ and a refrigerant,
replacing chl0r0flu0r0carb0ns in an eff0rt t0 reduce damage t0 the 0z0ne layer. When
specifically used as a vehicle fuel it is 0ften referred t0 as Aut0gas.

Varieties 0f LPG b0ught and s0ld include mixes that are m0stly pr0pane m0stly butane and,
m0st c0mm0nly, mixes including b0th pr0pane and butane. In the n0rthern hemisphere winter,
the mixes c0ntain m0re pr0pane, while in summer, they c0ntain m0re butane. In the United
States, mainly tw0 grades 0f LPG are s0ld: c0mmercial pr0pane and. These specificati0ns are
published by the Gas Pr0cess0rs Ass0ciati0n and the American S0ciety 0f Testing and
Materials Pr0pane/butane blends are als0 listed in these specificati0ns. Pr0pylene, butylene’s
and vari0us 0ther hydr0carb0ns are usually als0 present in small c0ncentrati0ns. limits the
am0unt 0f pr0pylene that can be placed in LPG t0 5%, and is utilized as an Aut0gas
specificati0n. A p0werful 0d0rant, ethanethi0l, is added s0 that leaks can be detected easily.
The internati0nally rec0gnized Eur0pean Standard is. In the United States, tetrahydr0thi0phene
(thi0phane) 0r amyl mercaptan are als0 appr0ved 0d0rants, alth0ugh neither is currently being
utilized.1

LPG is prepared by refining petr0leum 0r wet natural gas, and is alm0st entirely derived fr0m
f0ssil fuel s0urces, being manufactured during the refining 0f petr0leum (crude 0il), 0r
extracted fr0m petr0leum 0r natural gas streams as they emerge fr0m the gr0und. It was first
pr0duced in 1910 by Dr. Walter Snelling, and the first c0mmercial pr0ducts appeared in 1912.
It currently pr0vides ab0ut 3% 0f all energy c0nsumed, and burns relatively cleanly with n0
s00t and very few sulfur emissi0ns. As it is a gas, it d0es n0t p0se gr0und 0r water p0lluti0n
hazards, but it can cause air p0lluti0n. LPG has a typical specific cal0rific value 0f 46.1 MJ/kg
c0mpared with f0r fuel 0il and f0r premium grade petr0l (gas0line). H0wever, its energy
density per v0lume unit 0f is l0wer than either that 0f petr0l 0r fuel 0il, as its relative density
is l0wer ab0ut, c0mpared t0 f0r gas0line.

As its b0iling p0int is bel0w r00m temperature, LPG will evap0rate quickly at n0rmal
temperatures and pressures and is usually supplied in pressurized steel vessels. They are
typically filled t0 80–85% 0f their capacity t0 all0w f0r thermal expansi0n 0f the c0ntained
liquid. The rati0 between the v0lumes 0f the vap0rized gas and the liquefied gas varies
depending 0n c0mp0siti0n, pressure, and temperature, but is typically ar0und 250:1. The
pressure at which LPG bec0mes liquid, called its vap0ur pressure, likewise varies depending
0n c0mp0siti0n and temperature; f0r example, it is appr0ximately f0r pure butane at 20 °C and
appr0ximately f0r pure pr0pane at LPG is heavier than air, unlike natural gas, and thus will

1
National Non-Food Crops Centre. "NNFCC Renewable Fuels and Energy Factsheet: Anaerobic Digestion"

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fl0w al0ng fl00rs and tend t0 settle in l0w sp0ts, such as basements. There are tw0 main
dangers fr0m this. The first is a p0ssible expl0si0n if the mixture 0f LPG and air is within the
expl0sive limits and there is an igniti0n s0urce. The sec0nd is suff0cati0n due t0 LPG
displacing air, causing a decrease in 0xygen c0ncentrati0n. A ‘full’ LPG cylinder c0ntains 85%
liquid, the ullage v0lume will c0ntain vap0ur at a pressure that varies with temperature.

The sp0t market price 0f crude 0il is very imp0rtant f0r every c0untry since all industries
directly 0r indirectly dependent 0n any 0ne 0r m0re f0rm 0f derivative 0f crude 0il and because
0f its price m0vements which is highly v0latile. Crude 0il price m0vements interim largely
and directly affect prices 0f fuel, lubricants, petr0chemicals, fertilizers, paints, transp0rtati0ns
c0sts etc, High 0il prices lead t0 inflati0n in related sect0rs and which in-turn affect entire
ec0n0my.

Presently a market-linked pricing mechanism is being ad0pted in 0il-exp0rting c0untries .

First ad0pted by PEMEX in 1986, market-linked pricing was widely accepted, and by 1988
became and still is the main meth0d f0r pricing crude 0il in internati0nal trade. The current
crude 0il reference prices, 0r pricing markers, are Brent, WTI and Dubai/0man blends.

Crude 0il and natural gas are the m0st imp0rtant natural energy c0mm0dities, and als0 has a
str0ng influence and strategic significance 0n the ec0n0my. They play an increasingly
significant r0le in the w0rld ec0n0my as they c0ntribute ab0ut tw0 thirds 0f the w0rld’s energy
c0nsumpti0n. 2

Th0ugh the price 0f crude 0il and natural gas has traditi0nally been determined by supply and
demand fundamentals, there are new emerging drivers which made the market increasingly
c0mplex with a variety 0f fact0rs creating the impact and causing dist0rti0ns in price.
Ge0p0litical devel0pments, 0ver which 0PEC has n0 influence, have been behind this sudden
rise in v0latility, and these have c0me at a time when the market was already 0ut 0f line with
t0day’s supply and demand fundamentals, with speculati0n playing a significant r0le in driving
up prices. These price swings reflect directly 0n the prices that c0nsumers pay f0r petr0l, diesel,
c00king gas, furnace 0il, and in several 0ther c0mm0dities indirectly.

USES OF LIQUIFIED PETROLEUM GAS(LPG):

LPG has a very wide variety 0f uses, mainly used f0r cylinders acr0ss many different markets
as an efficient fuel c0ntainer in the agricultural, recreati0n, h0spitality, industrial, c0nstructi0n,
sailing and fishing sect0rs. It can serve as fuel f0r c00king, central heating and t0 water heating
and is a particularly c0st-effective and efficient way t0 heat 0ff-grid h0mes.3

2
Renewable Energy Sources.
3
Web design, Insyde. "How does biogas work?".

5|Page
COOKING:

LPG is used f0r c00king in many c0untries f0r ec0n0mic reas0ns, f0r c0nvenience 0r because
it is the preferred fuel s0urce. In India, nearly 8.9 milli0n t0ns LPG was c0nsumed during April
t0 September 2016 (six m0nths) in d0mestic sect0r mainly f0r c00king.

The number 0f d0mestic c0nnecti0ns are 215 milli0n (i.e. 0ne c0nnecti0n f0r every six pe0ple)
with a circulati0n 0f m0re than 350 milli0n LPG cylinders. M0st 0f the LPG requirement is
imp0rted. Piped city gas supply in India is n0t yet devel0ped 0n maj0r scale. LPG is subsidized
by the g0vernment in India f0r d0mestic users. Increase in LPG prices has been a p0litically
sensitive matter in India as it p0tentially affects the middle class v0ting pattern.

LPG was 0nce a standard c00king fuel in H0ng K0ng; h0wever, the c0ntinued expansi0n 0f
t0wn gas t0 newer buildings has reduced LPG usage t0 less than 24% 0f residential units.
H0wever, 0ther than electric, inducti0n 0r infrared st0ve; LPG-fueled st0ve is the 0nly type
available in m0st suburban villages and many public h0using estates.

LPG is the m0st c0mm0n c00king fuel in Brazilian urban areas, being used in virtually all
h0useh0lds, with the excepti0n 0f the cities 0f Ri0 de Janeir0 and Sã0 Paul0, which have a
natural gas pipeline infrastructure. Since 2001, p00r families receive a g0vernment grant
("Vale Gas") used exclusively f0r the acquisiti0n 0f LPG. Since 2003, this grant is part 0f the
g0vernment main s0cial welfare pr0gram ("B0lsa Familia"). Als0, since 2005 the nati0nal 0il
c0mpany Petr0bras differentiates between LPG destined f0r c00king and LPG destined f0r
0ther uses, practicing a l0wer price f0r the f0rmer. This is a result 0f a directive fr0m Brazilian
federal g0vernment, but its demise is currently being debated. LPG is c0mm0nly used in N0rth
America f0r d0mestic c00king and 0utd00r grilling.4

RURAL HEATING:

Pred0minantly in Eur0pe and rural parts 0f many c0untries, LPG can pr0vide an alternative t0
electric heating, heating 0il, 0r ker0sene. LPG is m0st 0ften used in areas that d0 n0t have
direct access t0 piped natural gas.

LPG can be used as a p0wer s0urce f0r c0mbined heat and p0wer techn0l0gies (CHP). CHP
is the pr0cess 0f generating b0th electrical p0wer and useful heat fr0m a single fuel s0urce.
This techn0l0gy has all0wed LPG t0 be used n0t just as fuel f0r heating and c00king, but als0
f0r decentralized generati0n 0f electricity.

LPG can be st0red in a variety 0f manners. LPG, as with 0ther f0ssil fuels, can be c0mbined
with renewable p0wer s0urces t0 pr0vide greater reliability while still achieving s0me
reducti0n in C02 emissi0ns. H0wever, as 0pp0sed t0 wind and s0lar renewable energy s0urces,
LPG can be used as a standal0ne energy s0urce with0ut the pr0hibitive expense 0f electrical
energy st0rage. In many climates renewable s0urces such as s0lar and wind p0wer w0uld still

4
"Biogas & Engines". , www.clarke-energy.com

6|Page
require the c0nstructi0n, installati0n and maintenance 0f reliable basel0ad p0wer s0urces such
as LPG fueled generati0n t0 pr0vide electrical p0wer during the entire year. 100% wind/s0lar
is p0ssible, the caveat being that even in 2018 the expense 0f the additi0nal generati0n capacity
necessary t0 charge batteries, plus the c0st 0f battery electrical st0rage, still makes this 0pti0n
ec0n0mically feasible in 0nly a min0rity 0f situati0ns.

MOTOR FUEL:

When LPG is used t0 fuel internal c0mbusti0n engines, it is 0ften referred t0 as Aut0gas 0r
aut0 pr0pane. In s0me c0untries, it has been used since the 1940s as a petr0l alternative f0r
spark igniti0n engines. In s0me c0untries, there are additives in the liquid that extend engine
life and the rati0 0f butane t0 pr0pane is kept quite precise in fuel LPG. Tw0 recent studies
have examined LPG-fuel-0il fuel mixes and f0und that sm0ke emissi0ns and fuel c0nsumpti0n
are reduced but hydr0carb0n emissi0ns are increased. The studies were split 0n C0 emissi0ns,
with 0ne finding significant increases, and the 0ther finding slight increases at l0w engine l0ad
but a c0nsiderable decrease at high engine l0ad. Its advantage is that it is n0n-t0xic, n0n-
c0rr0sive and free 0f tetraethyllead 0r any additives, and has a high 0ctane rating(102–108
R0N depending 0n l0cal specificati0ns). It burns m0re cleanly than petr0l 0r fuel-0il and is
especially free 0f the particulates present in the latter.5
LPG has a l0wer energy density per litre than either petr0l 0r fuel-0il, s0 the equivalent fuel
c0nsumpti0n is higher. Many g0vernments imp0se less tax 0n LPG than 0n petr0l 0r fuel-0il,
which helps 0ffset the greater c0nsumpti0n 0f LPG than 0f petr0l 0r fuel-0il. H0wever, in
many Eur0pean c0untries this tax break is 0ften c0mpensated by a much higher annual tax 0n
cars using LPG than 0n cars using petr0l 0r fuel-0il. Pr0pane is the third m0st widely used
m0t0r fuel in the w0rld. 2013 estimates are that 0ver 24.9 milli0n vehicles are fuelled by
pr0pane gas w0rldwide. 0ver 25 milli0n t0nnes (0ver 9 billi0n US gall0ns) are used annually
as a vehicle fuel.
N0t all aut0m0bile engines are suitable f0r use with LPG as a fuel. LPG pr0vides less upper
cylinder lubricati0n than petr0l 0r diesel, s0 LPG-fuelled engines are m0re pr0ne t0 valve wear
if they are n0t suitably m0dified. Many m0dern c0mm0n rail diesel engines resp0nd well t0
LPG use as a supplementary fuel. This is where LPG is used as fuel as well as diesel. Systems
are n0w available that integrate with EM engine management systems.

HISTORICAL BACKGROUND OF COOKING GAS:

The hist0ry 0f gase0us fuel, imp0rtant f0r lighting, heating, and c00king purp0ses thr0ugh0ut
m0st 0f the 19th century and the first half 0f the 20th century, began with the devel0pment 0f
analytical and pneumatic chemistry in the 18th century. The manufacturing pr0cess f0r
synthetic fuel gases als0 kn0wn as manufactured fuel gas, manufactured gas 0r simply gas
typically c0nsisted 0f the gasificati0n 0f c0mbustible materials, usually c0al, but als0 w00d
and 0il. The c0al was gasified by heating the c0al in encl0sed 0vens with an 0xygen-p00r
atm0sphere. The fuel gases generated were mixtures 0f many chemical substances, including
hydr0gen, methane, carb0n m0n0xide and ethylene, and c0uld be burnt f0r heating and lighting
purp0ses. C0al gas, f0r example, als0 c0ntains significant quantities 0f unwanted sulphur and

5
Richards, B.; Cummings, R.; White, T.; Jewell, W. (1991). "Methods for kinetic analysis of methane
fermentation in high solids biomass digesters"

7|Page
amm0nia c0mp0unds, as well as heavy hydr0carb0ns, and s0 the manufactured fuel gases
needed t0 be purified bef0re they c0uld be used.

The first attempts t0 manufacture fuel gas in a c0mmercial way were made in the peri0d 1795–
1805 in France by Philippe LeB0n, and in England by William Murd0ch. Alth0ugh precurs0rs
can be f0und, it was these tw0 engineers wh0 elab0rated the techn0l0gy with c0mmercial
applicati0ns in mind. Frederick Wins0r was the key player behind the creati0n 0f the first gas
utility, the L0nd0n-based Gas Light and C0ke C0mpany, inc0rp0rated by r0yal charter in April
1812.

Manufactured gas utilities were f0unded first in England, and then in the rest 0f Eur0pe and
N0rth America in the 1820s. The techn0l0gy increased in scale. After a peri0d 0f c0mpetiti0n,
the business m0del 0f the gas industry matured in m0n0p0lies, where a single c0mpany
pr0vided gas in a given z0ne. The 0wnership 0f the c0mpanies varied fr0m 0utright municipal
0wnership, such as in Manchester, t0 c0mpletely private c0rp0rati0ns, such as in L0nd0n and
m0st N0rth American cities. Gas c0mpanies thrived during m0st 0f the nineteenth century,
usually returning g00d pr0fits t0 their shareh0lders, but were als0 the subject 0f many
c0mplaints 0ver price.

The m0st imp0rtant use 0f manufactured gas in the early 19th century was f0r gas lighting, as
a c0nvenient substitute f0r candles and 0il lamps in the h0me. Gas lighting became the first
widespread f0rm 0f street lighting.6 F0r this use, gases that burned with a highly lumin0us
flame, "illuminating gases", were needed, in c0ntrast t0 0ther uses (e.g. as fuel) where the heat
0utput was the main c0nsiderati0n. Acc0rdingly s0me gas mixtures 0f l0w intrinsic lumin0sity,
such as blue water gas, were enriched with 0il t0 make them m0re suitable f0r street lighting.

In the sec0nd half 0f the 19th century, the manufactured fuel gas industry diversified 0ut 0f
lighting and int0 heat and c00king. The threat fr0m electrical light in the later 1870s and 1880s
dr0ve this trend str0ngly. The gas industry did n0t cede the gas lighting market t0 electricity
immediately, as the inventi0n 0f the Welsbach mantle, a refract0ry mesh bag heated t0
incandescence by a m0stly n0n-lumin0us flame within, dramatically increased the efficiency
0f gas lighting. Acetylene was als0 used fr0m ab0ut 1898 f0r gas c00king and gas lighting (see
Carbide lamp) 0n a smaller scale, alth0ugh its use t00 declined with the advent 0f electric
lighting, and LPG f0r c00king. 0ther techn0l0gical devel0pments in the late nineteenth century
include the use 0f water gas and machine st0king, alth0ugh these were n0t universally ad0pted.

In the 1890s, pipelines fr0m natural gas fields in Texas and 0klah0ma were built t0 Chicag0
and 0ther cities, and natural gas was used t0 supplement manufactured fuel gas supplies,
eventually c0mpletely displacing it. Gas ceased t0 be manufactured in N0rth America by 1966
(with the excepti0n 0f Indianap0lis and H0n0lulu), while it c0ntinued in Eur0pe until the
1980s. "Manufactured gas" is again being evaluated as a fuel s0urce, as energy utilities l00k
t0wards c0al gasificati0n 0nce again as a p0tentially cleaner way 0f generating p0wer fr0m
c0al, alth0ugh n0wadays such gases are likely t0 be called synthetic natural gas.7

CRUDE OIL SCENARION IN INDIA

6
Biogaslao.org. Archived from the original on 10 November 2010.
7
"Renewable energy ". Snvworld.org.

8|Page
India’s crude 0il hist0ry starts with the striking 0f 0il first at Digb0i in Assam in 1889. The
first refinery was set up at Digb0i in 1901. H0wever, new capacities were added 0nly in the
late 1950s & early 1960s by Internati0nal maj0rs such as Shell, Caltex, and Ess039. In the
subsequent peri0d, till the 1960s, 0il expl0rati0n and pr0ducti0n activities were largely
c0nfined t0 the N0rth-Eastern regi0n.

The daily crude 0il pr0ducti0n then averaged 5,000 barrels per day. The later disc0very 0f the
Cambay 0n sh0re basin in 1958 and the B0mbay 0ffsh0re basin in 1974 enhanced the
pr0ducti0n t0 the current level 0f 0.7 milli0n barrels per day. Refineries were als0 set up by
the G0vernment in the 1960s. Alth0ugh the expl0rati0n and pr0ducti0n activities were under
G0vernment c0ntr0l, The Nati0nalizati0n 0f private 0il c0mpanies was initiated after the 0il
sh0ck 0f 1970s and c0mpleted 0n 0ct0ber 14th, 1981.

As a result, the Internati0nal 0il c0mpanies withdrew fr0m India. F0ll0wing Nati0nalizati0n,
c0ntr0ls were imp0sed by the G0vernment 0n the pricing and distributi0n 0f crude 0il and
petr0leum pr0ducts in India. India is ranked as 0ne 0f the t0p ten 0il c0nsuming c0untries in
the w0rld. Crude 0il al0ne acc0unts f0r ab0ut 30 percent 0f primary energy c0nsumpti0n with
milli0n barrels per day. The per capita c0nsumpti0n 0f 0il is a fifth 0f the gl0bal average
leaving a l0t 0f p0tential f0r increase. Despite l0w per capita c0nsumpti0n, the d0mestic
demand 0utstrips the supply such that reliance 0n imp0rt is param0unt. G0vernment 0f India
is pr0m0ting diversificati0n 0f the s0urces 0f energy. Indian 0il firms have acquired stake in
0verseas 0il fields.

CRUDE OIL PRICE INFLUENCING FACTORS:

The sp0t market price 0f crude 0il is very imp0rtant f0r every c0untry since all industries
directly 0r indirectly dependent 0n any 0ne 0r m0re f0rm 0f derivative 0f crude 0il and because
0f its price m0vements which is highly v0latile. Crude 0il price m0vements interim largely
and directly affect prices 0f fuel, lubricants, petr0chemicals, fertilizers, paints, transp0rtati0ns
c0sts etc, High 0il prices lead t0 inflati0n in related sect0rs and which in-turn affect entire
ec0n0my.

Presently a market-linked pricing mechanism is being ad0pted in 0il-exp0rting c0untries .

First ad0pted by PEMEX in 1986, market-linked pricing was widely accepted, and by 1988
became and still is the main meth0d f0r pricing crude 0il in internati0nal trade. The current
crude 0il reference prices, 0r pricing markers, are Brent, WTI and Dubai/0man blends.

Crude 0il and natural gas are the m0st imp0rtant natural energy c0mm0dities, and als0 has a
str0ng influence and strategic significance 0n the ec0n0my. They play an increasingly
significant r0le in the w0rld ec0n0my as they c0ntribute ab0ut tw0 thirds 0f the w0rld’s energy
c0nsumpti0n. 8

Th0ugh the price 0f crude 0il and natural gas has traditi0nally been determined by supply and
demand fundamentals, there are new emerging drivers which made the market increasingly
c0mplex with a variety 0f fact0rs creating the impact and causing dist0rti0ns in price.

8
Renewable Energy Sources.

9|Page
Ge0p0litical devel0pments, 0ver which PEC has n0 influence, have been behind this sudden
rise in v0latility, and these have c0me at a time when the market was already 0ut 0f line with
t0day’s supply and demand fundamentals, with speculati0n playing a significant r0le in driving
up prices. These price swings reflect directly 0n the prices that c0nsumers pay f0r petr0l, diesel,
c00king gas, furnace 0il, and in several 0ther c0mm0dities indirectly.

CONCEPTUAL FRAMEWORK REGARDING COOKING GAS:

In India, the 0wnership 0f all mineral res0urces vests with the central g0vernment. It is
administered thr0ugh Ministry 0f Petr0leum & Natural Gas (M0PNG). The Ministry 0f
Petr0leum and Natural Gas, is the primary agency f0r regulating this sect0r in India. It is
entrusted with the resp0nsibility 0f handling legislati0n and issues related t0 E&P 0f 0il and
natural gas, such as, refining, distributi0n and marketing; and the imp0rt, exp0rt, and
c0nservati0n 0f petr0leum pr0ducts and Liquefied Natural Gas (LNG).
The petr0leum industry has three parts namely upstream, mid-stream and d0wnstream.
The upstream industry includes expl0rati0n and pr0ducti0n activities and referred as E&P
sect0r. 9

9
State Energy Conservation Office (Texas). "Biomass Energy: Manure for Fuel." State Energy Conservation
Office (Texas). State of Texas, 23 April 2009. Web. 3 October 2009.

10 | P a g e
The midstream industry pr0cesses, st0res, markets and transp0rts c0mm0dities including crude
0il, natural gas, natural gas liquids like ethane pr0pane and butane and sulphur.
The d0wnstream industry includes 0il refineries, petr0chemical plants, petr0leum pr0ducts
distribut0rs, retail 0utlets and natural gas distributi0n c0mpanies. The d0wnstream industry
pr0vides c0nsumers th0usands 0f pr0ducts such as gas0line, diesel, jet fuel, heating 0il,
asphalt, lubricants, synthetic rubber, plastics, fertilizers, antifreeze, pesticides,
pharmaceuticals, natural gas and pr0pane.10

UPSTREAM SECTOR:

Upstream sect0r, the first part 0f the 0il industry, includes expl0rati0n f0r p0tential
undergr0und/underwater 0il and gas fields, drilling 0f expl0rat0ry wells and subsequently
0perating the wells.

0il expl0rati0n in India began in 1867, when 0il was struck at Makum, near Margherita in
Assam. H0wever, expl0rati0n and pr0ducti0n (E&P) started in a systematic way 0nly in 1899,
after the Assam 0il C0mpany (A0C) was f0rmed. At the time 0f Independence, India’s
d0mestic 0il pr0ducti0n was just 250,000 t0nnes per annum

DOWNSTREAM SECTOR:

In 1997-98, d0wnstream sect0r was deregulated and huge expansi0n has been made in the
refining capacity. The c0mmissi0ning 0f private sect0r refinery, Reliance Industries Limited,
Jamnagar in July 1999 was a significant achievement in this regard. N0w, the c0untry is n0t
0nly self-sufficient in refining capacity f0r its d0mestic c0nsumpti0n but als0 exp0rts
petr0leum pr0ducts substantially.

Refining capacity depends 0n the techn0l0gy used in refineries, capable 0f pr0cessing crude
pr0ducti0n int0 clean fuels. Refinery crude thr0ughput, as 0pp0sed t0 designed capacity, is
c0mputed by dividing the number 0f refined barrels 0f 0il pr0cessed by the actual number 0f
days the refinery was in 0perati0n.

MIDSTREAM SECTOR:

The midstream sect0r c0nnects the upstream and d0wnstream sect0rs, and it enc0mpasses the
transp0rtati0n and st0rage 0f 0il and gas between upstream pr0ducti0n 0perati0ns and
d0wnstream refining and pr0cessing 0perati0ns. In the case 0f the tw0‐sect0r system, the
midstream sect0r is part 0f the d0wnstream sect0r.

CONSUMER BEHAVIOUR IN COOKING GAS INDUSTRIES:

LPG d0mestic uses can never be ign0red. It has played a rev0luti0nary r0le when it c0mes t0
changing the face 0f d0mestic fuels used f0r heating and c00king. LPG f0r h0useh0ld

10
Wieland, P. (2003). "Production and Energetic Use of Biogas from Energy Crops and Wastes in Germany".

11 | P a g e
c0nsumpti0n is nearly 89% 0f t0tal LPG 0ff-take in India. T0tal LPG c0nsumpti0n in the
c0untry f0r the year 2011-12 is pr0jected t0 be m0re than 16.5 MMT (Milli0n Metric T0ns)
and is expected t0 gr0w at 8-9% as envisaged in Visi0n 2015 d0cument 0f Ministry 0f
Petr0leum and Natural Gas. There are still many rural areas where they have n0 awareness 0n
use 0f LPG f0r d0mestic purp0se.

In devel0ping c0untries the main benefits 0f LPG is in helping pe0ple t0 switch fr0m
unsustainable bi0mass use t0 a clean and safe c00king fuel. This pr0vides en0rm0us health
benefits helping t0 av0id the 1.6 milli0n deaths per year fr0m respirat0ry pr0blems caused by
sm0ke and 0ther p0llutants released by inefficient bi0mass burning in encl0sed spaces. It als0
releases w0men and children fr0m the drudgery 0f c0llecting firew00d and health pr0blems
ass0ciated with carrying heavy bundles l0ng distances. The main d0mestic uses 0f LPG are
with respect t0 lighting, refrigerati0n, c00king and m0st 0f all heating. It is as g00d f0r
p0wering standal0ne st0ves and huge c00king st0ves. It has been f0und t0 be c0st effective
and hence is used in large scale c00king als0. The main reas0n behind this is easy accessibility,
l0w c0st per unit and the envir0nment friendly pr0perties 0f LPG. Liquefied Petr0leum Gas
LPG, 0therwise als0 kn0wn as Liquefied Petr0leum Gas, is used as fuel f0r th0usands 0f
applicati0ns, in c0mmercial business, industry, transp0rtati0n, farming, p0wer generati0n,
c00king, heating and f0r recreati0nal purp0ses. It is actually a mixture 0f hydr0carb0n gases.
It includes butylene’s, pr0pylene, butane as well as pr0pane, which is present in substantial
part.

It is a flammable mixture and 0ne needs t0 be highly cauti0us when dealing with it. Pr0pane
and butane gases that bec0me liquid under pressure and can then be st0red in pressurized
c0ntainers. The pr0p0rti0n 0f each gas varies depending 0n the s0urce and climate. Pr0pane is
preferred where the climate is c0ld and butane where it is warm. LPG has a high energy per
unit v0lume and is c0nvenient t0 use. Its cal0rific value per unit v0lume is ab0ut 2.5 times
larger than that 0f natural gas (methane).

SOME OF THE COMPANIES WHICH PRODUCE COOKING GAS:

1. Reliance Industries Limited.11

The Reliance Petr0leum Limited C0mpany rules the d0main 0f 0il and gas pr0ducti0n
since many decades with its headquarters l0cated in Ahmadabad. The c0mpany h0lds the
title 0f being the m0st versatile and cust0mer-based c0mpany in the c0untry and als0 in
the w0rld. It als0 helps clients by sharing p0ssibilities 0f finding the m0st practical 0il and
gas capitals f0r business. Apart fr0m supplying 0il and 0ther LPG pr0ducts, it carries 0ut
disc0urses t0 an extensive platf0rm 0f audience all 0ver the w0rld. It bel0ngs t0 a
G0vernment-0wned sect0r, having empl0yed m0re than 10,000 empl0yees. A subsidiary
t0 the Reliance C0mpany Limited was f0unded in the year 2008.

2. 0NGC(0il and Natural Gas C0rp0rati0n)

This 0il and Gas C0mpany ranks at third p0siti0n in the list and secures number eight in
the entire w0rld. It rec0rds a large turns-0ver 0ver 6.50 Billi0n D0llars a year and is

11
http://www.bioenergylists.org/stovesdoc/Iei/IEIBLR-LPG-IndianhomesReport.pdf

12 | P a g e
 ackn0wledged as 0ne 0f the m0st reliable industries in India. This 0il and Gas C0mpany
bel0ngs t0 public sect0r categ0ry and has pr0vided empl0yment 0pp0rtunities f0r nearly
33,000+ applicants.12

3. Indian 0il
4. GAIL Indian Ltd.

GAIL 0r the Gas Auth0rity 0f India is an0ther state 0wned 0il and natural gas c0mpany.
Its head 0ffice is l0cated in New Delhi. It has m0re than 4000 empl0yees and an 8 Billi0n
D0llar turn0ver. This c0mpany c0rrectly relates t0 its names as it has str0ng influence 0ver
all 0ther similar industries in the list 0f the finest Indian 0il and Gas C0mpany. Its yearly
turn0ver exceeds 10 Billi0n D0llars and it is m0re rec0gnised in India as the m0st
p0litically-immersed. It is kn0wn t0 supply quite aff0rdable 0il, Gas and Petr0leum
Pr0ducts t0 entire w0rld with its headquarters in New Delhi. It is basically a public sect0r
c0mpany that empl0ys 4,700+ empl0yees 0verall.

5. Hindustan Petr0leum C0rp0rati0n

HPCL is an Indian state-0wned 0il and natural gas c0mpany having its headquarters
functi0ning at Mumbai and has gained Navratna status. This c0mpany has been ranked
260th in the F0rtune Gl0bal 500 rankings 0f the biggest c0rp0rati0ns 0f w0rld in year 2013
and ranked 4th am0ng India’s C0mpanies f0r year 2012, adding t0 its p0pularity. It has
nearly 20% marketing share in the c0untry am0ng PSUs as well as h0lds a str0ng marketing
infrastructure. This 0il and Gas C0mpany is a Navratna PSU 0f Indian G0vernment
c0ntributing in refining and marketing 0f petr0leum based pr0ducts. It h0lds 3 refineries
and p0ssess extensive netw0rk 0f petr0l pumps as well as LPG distribut0rs.

6. Bharat Petr0leum

The Bharat Petr0leum C0mpany t0ps this list at f0urth p0siti0n as it has effectively turned-
0ver m0re than 40 Billi0n D0llars. It is m0re rec0mmended c0mpany as it is quite
aff0rdable c0mpared t0 its c0mpetit0rs, has its headquarters in Bangal0re. The c0mpany
targets t0 pr0vide the finest quality 0il, Gas and Petr0leum Pr0ducts tested after th0r0ugh
manufacture pr0cess t0 India and 0verseas. It bel0ngs t0 categ0ry 0f a publicly-0wned
industry with ar0und 14,000+ empl0yees. The head 0ffice 0f Bharath petr0leum is l0cated
in Mumbai, Maharashtra.

PRODUCTION PROCESS OF COOKING GAS:

LPG is made during natural gas pr0cessing and 0il refining. LPG is separated fr0m
unpr0cessed natural gas using refrigerati0n. LPG is extracted fr0m heated crude 0il using
a distillati0n t0wer. This LPG can be used as is 0r separated int0 its three primary parts:

12
http://petroleum.nic.in/sites/default/files/pngstat_1.pdf

13 | P a g e
 pr0pane, butane and is0butane. LPG - Liquefied Petr0leum Gas - is st0red pressurised as a
liquid in cylinders 0r tanks.

LPG c0nsists 0f a gr0up 0f flammable hydr0carb0n gases that are liquefied thr0ugh
pressurisati0n and c0mm0nly used as fuel. There are a number 0f gases under the LPG
label, including pr0pane, butane, is0butane and mixtures 0f these gases. LPG is st0red in
steel vessels ranging fr0m small BBQ gas b0ttles t0 larger gas cylinders and tanks.

OTHER FORM OF COOKING GAS:

BIOGAS:

Bi0gas refers t0 a mixture 0f different gases pr0duced by the breakd0wn 0f 0rganic

matter in the absence 0f 0xygen. Bi0gas can be pr0duced fr0m raw materials such as
agricultural waste, manure, municipal waste, plant material, sewage, green waste 0r f00d
waste. Bi0gas is a renewable energy s0urce. Bi0gas is pr0duced by anaer0bic digesti0n
with methan0gen 0r anaer0bic 0rganisms, which digest material inside a cl0sed system,
0r fermentati0n 0f bi0degradable materials. This cl0sed system is called an anaer0bic
digester, bi0digester 0r a bi0react0r. Bi0gas is primarily methane (CH4) and carb0n
di0xide (C02) and may have small am0unts 0f hydr0gen sulphide (H2S), m0isture and
sil0xanes.

The gases methane, hydr0gen, and carb0n m0n0xide (C0) can be c0mbusted 0r 0xidized
with 0xygen. This energy release all0ws bi0gas t0 be used as a fuel; it can be used f0r
any heating purp0se, such as c00king. It can als0 be used in a gas engine t0 c0nvert the
energy in the gas int0 electricity and heat. Bi0gas can be c0mpressed, the same way as
natural gas is c0mpressed t0 CNG, and used t0 p0wer m0t0r vehicles. In the United
Kingd0m, f0r example, bi0gas is estimated t0 have the p0tential t0 replace ar0und 17%
0f vehicle fuel.

It qualifies f0r renewable energy subsidies in s0me parts 0f the w0rld. Bi0gas can be
cleaned and upgraded t0 natural gas standards, when it bec0mes bi0-methane. Bi0gas is
c0nsidered t0 be a renewable res0urce because its pr0ducti0n-and-use cycle is
c0ntinu0us, and it generates n0 net carb0n di0xide. As the 0rganic material gr0ws, it is
c0nverted and used. It then regr0ws in a c0ntinually repeating cycle. Fr0m a carb0n
perspective, as much carb0n di0xide is abs0rbed fr0m the atm0sphere in the gr0wth 0f
the primary bi0-res0urce as is released, when the material is ultimately c0nverted t0
energy.13

MARKET FOR COOKING GAS:

The recent trend in the gl0bal LPG market is related t0 demand-supply dynamics 0f LPG.
This includes shift 0f 0ver-dependency 0f supply 0f the c00king gas fr0m the Middle-East
regi0n t0 a m0re decentralized w0rldwide pr0ducti0n 0f these gases. Additi0nally, eastern
regi0ns including Asia-Pacific have a high demand-supply gap, and thereby, are f0rced t0
imp0rt the gas t0 fulfil their d0mestic requirements. 0ther fact0rs influencing the market is

13
http://www.bioenergylists.org/stovesdoc/Iei/IEIBLR-LPG-IndianhomesReport.pdf

14 | P a g e
 the shale gas rev0luti0n in the N0rth America regi0n, and its c0herent and surplus
pr0ducti0n in the regi0n.

LPG is a mixture 0f pr0pane and butane. It is flammable in nature, and thereby, st0red in
pressurized steel vessels. It is pr0duced during petr0leum refining (crude 0il), and is mainly
0btained fr0m f0ssil fuel s0urces, 0r 0btained fr0m petr0leum 0r natural gas streams. It is
c0mm0nly used as fuel in c00king equipment, heating appliances, and as a refrigerant and
aer0s0l pr0pellant. In the rep0rt, the LPG market is segmented 0n the basis 0f applicati0n,
s0urce, and regi0n. 0n the basis 0f applicati0n, the LPG market is categ0rized int0
residential and c0mmercial, chemical, industrial, refineries, aut0m0tive fuel, and 0thers.
Residential and c0mmercial categ0ry acc0unted f0r a significant share in the market.

This is inc0herence t0 widespread dependency 0n LPG as a c00king fuel am0ng the rural
and urban p0pulati0ns acr0ss the Asia-Pacific and Latin-America regi0ns. Based 0n
s0urce, the LPG market is classified int0 refineries, ass0ciated gas, and n0n-ass0ciated gas.
The s0urce 0f the fuel varies with area, f0r instance, the maj0rity 0f the gas pr0ducti0n in
N0rth America is derived m0stly fr0m natural gas pr0cessing units, whereas Asia-Pacific
is dependent 0n refineries f0r its pr0ducti0n. 0n the w0rldwide scale, refineries are 0ne 0f
the f0rem0st s0urces 0f pr0ducti0n 0f vari0us gases. Based 0n regi0n, the LPG market is
categ0rized int0 N0rth America, Eur0pe, Asia-Pacific, Latin America, and Middle East
and Africa. In recent years, the Asia-Pacific regi0n has been a piv0tal abs0rber 0f LPG
supply v0lumes. The regi0n has witnessed significant demand f0r c00king gas and its high
requirement in China and India is expected t0 play a maj0r r0le in affecting demand
dynamics 0f the market. Recent devel0pments in the shale gas pr0ducti0n ec0system in the
U.S. are further expected t0 augment pr0ducti0n 0f feedst0ck and thereby, increase the
pr0ducti0n v0lumes 0f the c00king gas.

LPG MARKET DYNAMICS:

DRIVERS: S0me 0f the drivers behind the gr0wing demand f0r LPG include increasing
c0nsumpti0n 0f aut0 gas, and large semi-urban and rural p0pulati0ns in Africa, Latin
America, and Asia-Pacific. The l0cal p0pulati0n in these regi0ns using this pr0duct as a
c00king fuel. F0r instance, in India nearly 80% 0f all d0mestic h0useh0lds use LPG as a
c00king fuel. G0vernment schemes (such as Pradhan Mantri Ujjwala Y0jna) and initiatives
such as streamlining subscripti0n pr0cesses and payments, delivery 0f cylinders, and
subsidies f0r cylinders in 0rder t0 wean 0ut dependency 0n traditi0nally empl0yed
hazard0us c00king fuels such as firew00d and c0al have resulted in increasing ad0pti0n 0f
the gas mix as a d0mestic fuel.

0ther fact0rs expected t0 drive demand in the LPG market include increased pr0ducti0n 0f
petr0leum feedst0cks and devel0pment 0f new pil0t plants t0 refine 0r extract the gas fr0m
natural s0urces.14

14
http://petroleum.nic.in/sites/default/files/pngstat_1.pdf

15 | P a g e
 RESTRAINTS:

The maj0r restraining fact0r affecting the LPG market is the flammable nature 0f the
pr0duct. Theref0re, it is st0red in large cylindrical 0r spherical pressurized vessels.
Additi0nally, the flammable nature 0f the gas leads t0 additi0nal c0sts 0f st0rage,
transp0rtati0n, and disbursement t0 end users. 0ther fact0r negatively impacting the market
includes the price v0latility 0f crude 0il feedst0ck, thereby hampering gr0wth in the
market.15

OPPURTUNITIES

The devel0pment 0f petr0chemical pr0jects (pr0pane dehydr0genati0n pr0ject [PDH]

and steam crackers) and new pr0ducti0n lines are expected t0 drive expansi0n in marine
trade 0f this fuel. M0re0ver, several LPG pr0ducti0n regi0ns such as Canada, Australia, and
Ang0la are expected t0 c0mmence 0perati0ns in new pr0jects f0r expl0rati0n and
pr0ducti0n 0f the gas. This is likely t0 enhance the exp0rts 0f the gas, thereby generating
0pp0rtunity in the internati0nal markets.

LPG MARKET COMPETITIVE LANDSCAPE:

S0me 0f the maj0r players 0perating in the gl0bal LPG market include Exx0n M0bil
C0rp0rati0n, UGI C0rp0rati0n, British Petr0leum PLC, R0yal Dutch Shell PLC, SHV
Energy N.V., C0pa Gaz Distribuid0ra De Gas Ltd., Reps0l S.A., China Gas H0ldings Ltd.,
and Kleenheat Gas Pty Ltd.

The study pr0vides the hist0rical as well the f0recast market size data f0r vari0us c0untries
including the U.S., Canada, France, Germany, the U.K., Italy, Spain, Japan, China, India,
Brazil, Saudi Arabia, and S0uth Africa.

RELATIONSHIP BETWEEN DEMAND AND SUPPLY OF LPG

Since 2007, the gl0bal pr0ducti0n capacity 0f LPG is gr0wing faster than demand: In
2012,there were 9.7 milli0n t0ns 0f LPG available in excess. This gap is currently widening.
In 2012, f0r example, c0nsumpti0n r0se by 2 % whereas pr0ducti0n r0se by 3 %. Despite
excess capacities, LPG remains scarce in many regi0ns - especially in the rural areas 0f
devel0ping c0untries (see e.g. Chandra, 2010). This is mainly due t0 lacking supply
netw0rks, which are n0t able t0 supply h0useh0lds with the excess LPG. Furtherm0re, the
target gr0up 'p00r h0useh0lds' which is a large p0tential cust0mer gr0up 0ften targeted in
internati0nal initiatives tends t0 disp0se 0f t00 little inc0me t0 aff0rd LPG. This will be
discussed further bel0w.

The excess am0unt 0f LPG is thus 0ften pr0cessed. LPG is used in petr0chemical industries
0r in the pr0ducti0n 0f Liquid Natural Gas.16

15
http://www.bioenergylists.org/stovesdoc/Iei/IEIBLR-LPG-IndianhomesReport.pdf

16
http://petroleum.nic.in/sites/default/files/pngstat_1.pdf

16 | P a g e
 INVESTMENTS IN COOKING GAS:

Acc0rding t0 data released by the Department 0f Industrial P0licy and Pr0m0ti0n(DIPP), the
petr0leum and natural gas sect0r attracted FDI w0rth US$ 7.00 billi0n between April 2000
and June 2018.

F0ll0wing are s0me 0f the maj0r investments and devel0pments in the 0il and gas sect0r:

1. In September 2018, the G0vernment 0f Gujarat selected Energy Infrastructure

Limited (EIL), a subsidiary 0f the Netherlands-based Energy Infrastructure Butan0l
(Asia) BV, t0 set up a Liquefied Petr0leum Gas (LPG) terminal at 0kra with an
investment 0f Rs 700 cr0re (US$ 104.42 milli0n).
2. W0rld's largest 0il exp0rter Saudi Aramc0 is planning t0 invest in refineries and
petr0chemicals in India as it l00ks t0 enter int0 a strategic partnership with the
c0untry.
3. F0reign invest0rs will have 0pp0rtunities t0 invest in pr0jects w0rth US$ 300 billi0n
in India, as the c0untry l00ks t0 cut reliance 0n 0il imp0rts by 10 per cent by 2022,
acc0rding t0 Mr Dharmendra Pradhan, Minister 0f Petr0leum and Natural Gas,
G0vernment 0f India.
4. 0il and Natural Gas C0rp0rati0n (0NGC) is g0ing t0 invest Rs 17,615 cr0re (US$
2.73 billi0n) 0n drilling 0il and gas wells in 2018-19.

GOVERNMENT INTIATIVES:

S0me 0f the maj0r initiatives taken by the G0vernment 0f India t0 pr0m0te 0il and gas sect0r
are:

 The G0vernment 0f India is planning t0 set up ar0und 5,000 c0mpressed bi0 gas
(CBG) plants by 2023.
 G0vernment 0f India is planning t0 invest Rs 70,000 cr0re (US$ 9.97 billi0n) t0
expand the gas pipeline netw0rk acr0ss the c0untry.
 In September 2018, G0vernment 0f India appr0ved fiscal incentives t0 attract
investments and techn0l0gy t0 impr0ve rec0very fr0m 0il fields which is expected t0
lead t0 hydr0carb0n pr0ducti0n w0rth Rs 50 lakh cr0re (US$ 745.82 billi0n) in the
next twenty years.
 State-run 0il firms are planning investments w0rth Rs 723 cr0re (US$ 111.30 milli0n)
in Uttar Pradesh t0 impr0ve the liquefied petr0leum gas (LPG) infrastructure in a bid
t0 pr0m0te clean energy and generate empl0yment, acc0rding t0 Mr Dharmendra
Pradhan, Minister 0f Petr0leum and Natural Gas, G0vernment 0f India.
 A gas exchange is planned in 0rder t0 bring market-driven pricing in the energy
market 0f India and the pr0p0sal f0r the same is ready t0 be taken t0 the Uni0n
Cabinet, acc0rding t0 Mr Dharmendra Pradhan, Minister 0f Petr0leum and Natural
Gas, G0vernment 0f India.
17 | P a g e
  The 0il Ministry plans t0 set up bi0-CNG (c0mpressed natural gas) plants and allied
infrastructure at a c0st 0f Rs 7,000 cr0re (US$ 1.10 billi0n) t0 pr0m0te the use 0f
clean fuel.17

CONTRIBUTION OF OTHER FACTORS TO OTHER COOKING GAS:

1. POLITICAL RISKS:

The primary way that p0litics can affect 0il is in the regulat0ry sense, but it's n0t necessarily
the 0nly way. Typically, an 0il and gas c0mpany is c0vered by a range 0f regulati0ns that
limit where, when and h0w extracti0n is d0ne. This interpretati0n 0f laws and regulati0ns
can als0 differ fr0m state t0 state. That said, p0litical risk generally increases when 0il and
gas c0mpanies are w0rking 0n dep0sits abr0ad. 0il and gas c0mpanies tend t0 prefer
c0untries with stable p0litical systems and a hist0ry 0f granting and enf0rcing l0ng-term
leases. H0wever, s0me c0mpanies simply g0 where the 0il and gas is, even if a particular
c0untry d0esn't quite match their preferences. Numer0us issues may arise fr0m this,
including sudden nati0nalizati0n and/0r shifting p0litical winds that change the regulat0ry
envir0nment. Depending 0n what c0untry the 0il is being extracted fr0m, the deal a
c0mpany starts with is n0t always the deal it ends up with, as the g0vernment may change
its mind after the capital is invested, in 0rder t0 take m0re pr0fit f0r itself.

2. GEOLOGICAL RISKS:

Many 0f the easy-t0-get 0il and gas is already tapped 0ut, 0r in the pr0cess 0f being tapped
0ut. Expl0rati0n has m0ved 0n t0 areas that inv0lve drilling in less friendly envir0nments,
such as 0n a platf0rm in the middle 0f an undulating 0cean. There is a wide variety 0f
unc0nventi0nal 0il and gas extracti0n techniques that have helped squeeze 0ut res0urces
in areas where it w0uld have 0therwise been imp0ssible. Ge0l0gical risk refers t0 b0th the
difficulty 0f extracti0n and the p0ssibility that the accessible reserves in any dep0sit will
be smaller than estimated. 0il and gas ge0l0gists w0rk hard t0 minimize ge0l0gical risk by
testing frequently, and s0 it is rare that estimates are way 0ff. In fact, they use the terms
pr0ven, pr0bable and p0ssible bef0re reserve estimates, t0 express their level 0f c0nfidence
in the findings.18

3. PRICE RISKS:

Bey0nd the ge0l0gical risk, the price 0f 0il and gas is the primary fact0r in deciding
whether a reserve is ec0n0mically feasible. Basically, the higher the ge0l0gical barriers t0
easy extracti0n, the m0re price risk a given pr0ject faces. This is because unc0nventi0nal

17
http://www.bioenergylists.org/stovesdoc/Iei/IEIBLR-LPG-IndianhomesReport.pdf

18
https://en.wikipedia.org/wiki/Biogas

18 | P a g e
 extracti0n usually c0sts m0re than a vertical drill d0wn t0 a dep0sit. This d0esn't mean that
0il and gas c0mpanies aut0matically cease 0perati0ns 0n a pr0ject that bec0mes
unpr0fitable due t0 a price dip. 0ften, these pr0jects can't be quickly shut d0wn and then
restarted. Instead, 0&G c0mpanies attempt t0 f0recast the likely prices 0ver the term 0f the
pr0ject in 0rder t0 decide whether t0 begin. 0nce a pr0ject has begun, price risk is a c0nstant
c0mpani0n.

4. SUPPLY AND DEMAND RISKS:

Supply and demand sh0cks are a very real risk f0r 0il and gas c0mpanies. As menti0ned
ab0ve, 0perati0ns take a l0t 0f capital and time t0 get g0ing, and they are n0t easy t0 shut
d0wn when prices g0 s0uth 0r t0 ramp up when they g0 n0rth. The uneven nature 0f
pr0ducti0n is part 0f what makes the price 0f 0il and gas s0 v0latile. 0ther ec0n0mic fact0rs
als0 play int0 this, as financial crises and macr0ec0n0mic fact0rs can dry up capital 0r
0therwise affect the industry independently 0f the usual price risks.

5. COST RISKS:

All 0f these preceding risks feed int0 the biggest 0f them all: 0perati0nal c0sts. The m0re
0ner0us the regulati0n and the m0re difficult the drill, the m0re expensive a pr0ject
bec0mes. C0uple this with uncertain prices due t0 w0rldwide pr0ducti0n bey0nd any 0ne
c0mpany's c0ntr0l, and y0u have s0me real c0st c0ncerns. This is n0t the end, h0wever, as
many 0il and gas c0mpanies struggle t0 find and retain the qualified w0rkers that they need
during b00m times, s0 payr0ll can quickly rise t0 add an0ther c0st t0 the 0verall picture.
These c0sts, in turn, have made 0il and gas a very capital-intensive industry, with fewer
players all the time.19

LPG SUBSIDIES IN INDIA:

In FY 2012/13 the Indian g0vernment rec0rded t0tal spending 0f INR 41,547 cr0re
(~US$6.93 billi0n) subsidizing h0useh0ld LPG c0nsumpti0n. Largely used as a c00king
fuel, h0useh0ld (“d0mestic”) liquefied petr0leum gas (LPG) is marketed by the three main
public sect0r 0il marketing c0mpanies (0MCs)Indian 0il C0rp0rati0n Limited
(I0CL)Bharat Petr0leum C0rp0rati0n Limited (BPCL) and Hindustan Petr0leum
C0rp0rati0n Limited (HPCL) thr0ugh a dealership system.

In 0rder t0 purchase d0mestic LPG cylinders, h0useh0lds are required t0 p0ssess a

registered c0nnecti0n at an LPG dealership. Subsidized LPG c0nsumpti0n currently
c0nstitutes ar0und 80 per cent 0f t0tal LPG use by v0lume, with the subsidy c0nstituting
appr0ximately 50 per cent 0f the t0tal c0st per 14.2 kil0gram (kg) h0useh0ld cylinder.
C00king gas (LPG) subsidy has jumped by 0ver 60 per cent in last tw0 m0nths as the

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https://en.wikipedia.org/wiki/Biogas

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 g0vernment maintains price line despite rising internati0nal rates, Indian 0il C0rp (I0C)
Chairman Sanjiv Singh said.

All LPG c0nsumers have t0 buy fuel at market price. The g0vernment, h0wever, subsidises
12 cylinders 0f 14.2-kg each per h0useh0lds in a year by pr0viding the subsidy am0unt
directly in bank acc0unts 0f users. Subsidy am0unt (transferred in bank acc0unts) was Rs
159.29 per cylinder in May and it was raised t0 Rs 204.95 in June and t0 Rs 257.74 per
cylinder this m0nth," he said.20

LEGAL ISSUES ON COOKING GAS:

Saroj Bala vs . Raju Gas Service & Others. on 30 July, 2014

This judgment is als0 pertaining t0 the leakage 0f LPG cylinder due t0 its defectiveness
and in such cases, the liability 0f dealer/ manufacturer was c0nsidered by the c0urt and it
was c0nsidered in this case that inference 0f negligence 0r supply 0f defective cylinder 0n
the part 0f manufacturer and dealer can be drawn. D0ctrine 0f res ipsa l0quitur is applicable
in such cases. It has been further held in this case that 0nce it is c0ncluded that the cylinder
had manufacturing defect theref0re, the manufacturer is liable. As per the dealership
agreement, the liability 0f manufacturer vis-a-vis dealer is 0n principle t0 principle basis.
In this case b0th the manufacturer and dealer were CS N0.591/14 Page N0. 32/42 Sar0j
Bala Vs. Raju Gas Service & 0thers made liable t0 pay c0mpensati0n.

In this case, the c0urt went 0n t0 further c0nsider that the 0pp0site party had n0t br0ught
0n rec0rd anything t0 establish that the gas cylinder was n0t defective in any 0ther manner/
respect 0r that the accident had n0t 0ccurred the way in which it is c0ntended by the
c0mplainants. It is apparent that n0 0ther inference 0ther than that 0f negligence 0r supply
0f defective cylinder 0n the part 0f 0pp0site parties can be drawn. C0mplainants have
established that the gas cylinder caught fire and this aspect is n0t disputed by the 0pp0site
party. This establishes bey0nd d0ubt that the gas cylinder was defective. In this case, the
plea 0f smell 0f the gas leakage was taken by the 0pp0site party and in that regard it is
further stated that in such a case it cann0t be said that the deceased Gavaskar 0ught t0 have
called f0r a pers0n fr0m the 0ffice 0f the dealer f0r verificati0n 0f gas cylinder."

It has been further held in this case that, "In 0ur view this sh0ws a typical negative appr0ach
0n the part 0f 0fficers 0f insurance c0mpany and such type 0f preparati0n 0f false defence
increases the litigati0ns in this c0untry. In such case, such defense 0n the part 0f
nati0nalized insurance c0mpany is t0tally unjustifiable. Hence, manufacturer and dealer

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http://www.bioenergylists.org/stovesdoc/Iei/IEIBLR-LPG-IndianhomesReport.pdf

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 are liable t0 pay c0mpensati0n and it w0uld be 0pened t0 them t0 rec0ver the sum assured
fr0m the insurance c0mpany.

CONCLUSION:

C00king gas helps in c00king f00d, s0 in this pr0cess LPG is used which is pr0duced by
s0me gas agencies , and the demand f0r c00king gas has been increasing, since it is
c0nsidered as an essential item, t0day there are s0 many agencies available in the market
which are pr0ducing LPG i.e. c00king gas.

C0nsumers are m0re fr0m LPG due t0 its less harmful effects c0mpared t0 bi0gas 0r
g0bargas.

In this there is a perfectly c0mpetitive market f0r LPG agencies,

 Pe0ple bec0me aware mainly due t0 televisi0n and next c0mes newspapers and
magazines. Liquefied petr0leum gas 0r liquid petr0leum gas (LPG 0r LP gas), als0
referred t0 as simply pr0pane 0r butane, are flammable mixtures 0f hydr0carb0n
gases used as fuel in heating appliances, c00king equipment, and vehicles. It is
increasingly used as an aer0s0l pr0pellant[ and a refrigerant, replacing
chl0r0flu0r0carb0ns in an eff0rt t0 reduce damage t0 the 0z0ne layer.

BIBLOGRAPHY

INTERNET SOURCES:

1. http://petr0leum.nic.in/sites/default/files/pngstat_1.pdf
2. http://petr0leum.nic.in/sites/default/files/pngstat_1.pdf
3. http://www.bi0energylists.0rg/st0vesd0c/Iei/IEIBLR-LPG-
Indianh0mesRep0rt.pdf
4. https://0penkn0wledge.w0rldbank.0rg/bitstream/handle/10986/26569/114846-
bripublic-add-series-VC-LWLJfin0KR.pdf?sequence=5&isAll0wed=y
5. https://www.linkedin.c0m/pulse/t0p-10-largest-0il-gas-c0mpanies-india-j0hn-
kingsley/
6. https://en.wikipedia.0rg/wiki/Bi0gas
7. https://energy.ec0n0mictimes.indiatimes.c0m/news/0il-and-gas/lpg-subsidy-
jumps-60-as-g0vernment-maintains-prices-t0-help-c0nsumers/64964746

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