The natural gas sector is progressively opening up and there is considerable dynamism in the policy and regulatory environment. In this scenario a couple of main Indian Gas companies are fully geared up for fast growth through its strategy of Cooperation and Collaboration in resources and Competition in the market. The focus areas identified are (i) enhancing the transmission/distribution capability, (ii) petrochemicals and (iii) City Gas/CNG activities. By next year these companies are planning to unfold a number of projects in these areas to further strengthen their market position. In this article we are trying to brief on the energy market outlook.
Economic Outlook and Energy Markets:
The world’s energy requirements are growing rapidly. The World Economic Outlook 2007 predicts that world energy needs would grow by 55% from 11.4 BTOE to 17.7 BTOE during 2005 to 2030. China and India alone are expected to account for 45% of this increase.
Natural gas as a source of clean and efficient energy is increasingly becoming an obvious choice for industrial and domestic segments. However, against an estimated demand of about 180 MMSCMD for natural gas, the present supply is around 103 MMSCMD. The supply scenario for gas is expected to improve soon with arrival of gas from new domestic sources, especially in the eastern offshore and through import.
Government policy of Liberalization, Public-Private Participation and Globalization (LPG) has paid good dividend for the entire hydrocarbon value chain ensuring its integration with global markets. Structural reform of the gas industry has already been initiated with an independent mid and downstream oil and gas regulator. The Indian natural gas sector is progressively becoming more competitive with several players entering the sector. The key to success in this heterogeneous, multi-source market is sound planning of the gas infrastructure, supply reliability and long term reasonable price. In the emerging gas economy, GAIL Company’s inter state gas grid is a step towards achieving this goal.
GAIL has developed a sizeable natural gas market and presently transmits and markets over 80% of the natural gas in India. A 7,000km trunk gas pipeline network, a 400,000 tons petrochemical plant in Northern India, 7 gas processing plants producing over 1 million tones of LPG and other Liquid Hydrocarbons and over 1,900km long LPG pipeline transmission network spread over the country have made a significant contribution to the economy.
The average gas transmitted in 2007-08 was 82.1 MMSCMD against 77.28 MMSCMD in 2006-07. Besides additional transportation/supply of gas from the new fields of eastern off-shore area will further enhance values to all consumers.
LPG Transmission posted an increase of 11% over the last year reaching 2,754,000 MT in 2007-08. Polymer production also increased to 386,000 Tons in 2007-08 from 354,000 Tons of last year. In addition GAIL by commissioning a new HDPE plant with additional capacity of 100,000 TPA. It is proposed to further augment the capacity to 5,00,000 TPA gradually going upto 8,00,000 TPA.
The Indian company GAIL was adjudged as the “Gas Utility in Asia” and ranked among the gas utility worldwide in Platts Top 250 Global Energy Company List for 2007. The Company received the “Petrofed Oil and Gas Transportation Company of the Year” award for 2006-07 as well as the Infraline Energy Excellence Awards, 2007.
GAIL in India is making assiduous efforts towards achieving energy security through natural gas and has advocated two key initiatives. First is creation of CNG corridors along national highways, in proximity to trunk gas pipelines across the country to supply/dispense PNG and CNG to domestic and commercial vehicles. It can enable large scale conversion of vehicles to CNG resulting in substantial savings in the petroleum import bill and save precious foreign exchange, besides providing a cleaner environment. The company has recently formed a wholly-owned subsidiary ‘GAIL GAS Limited’ for gas distribution including city gas distribution and CNG corridor projects.
Second is to enhance regional cooperation to foster energy trade, investment, technology transfer and skill development etc in participating nations.
Five new trunk pipelines and two capacity augmentation projects are moving forward rapidly for timely completion. This will help raising pipeline handling capacity to over 300 MMSCMD by 2011-12 at an estimated investment of Rs20,000 crore.
Activity on the gas sourcing front by tying up with producers and suppliers of natural gas on long term and sustainable basis. E&P activities have started paying dividend as commercial production from Cambay Onland Block has commenced.
Considering Petrochemicals as the second most important business after natural gas in order to strengthen the same, areas are assessed in North Asia and CIS states by Indian companies for setting up a mega petrochemical complex.
This collaborative route towards business expansion has also been followed in the international market.
Human Resource in the Oil and gas sector are very precious and companies in this area are required to make special effort to nurture and develop talent pool in the gas sector through its state-of-the-art Training.
These companies with profitable revenues can set high standards of discharging social responsibilities in environment protection, community development, health care, literacy enhancement etc., like Rural education initiative, computer literacy, wild life conversation projects, drinking water resources, small village street lighting through solar energy sponsorship and so on. GAIL is doing some of these.