Chapter - I: 1.1 ONGC - History

CHAPTER – I
1.1 ONGC - History:
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 subsequently 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 produces 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 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
1.2 Functions & Duties

Oil And Natural Gas Corporation has been established to carry out the objectives
specified in the Memorandum & Articles of Association of the Company. The main
objectives are:
1.To acquire whole or any part of the undertaking, business, the assets/liabilities, rights,
obligations, power, goodwill, privileges, functions and associated establishment of
whatever nature of the Oil & Natural Gas Commission [Established under the Oil &
Natural Gas Commission Act (No. 43 of 1959)] and for that purpose carry into and carry
into effect such agreements, contracts, arrangements as may become necessary.
2. To plan, promote, organize and implement programmes for the development of

Petroleum Resources and the Production and Sale of Petroleum and Petroleum Products
produced by it and for all matters connected therewith.
3. To plan, promote, organize exploit and implement programmes for the efficient
development of petroleum and petroleum products and alternate resources of energy, and
the production, distribution, conservation and sale of Petroleum and other
products/services produced by it and for all the matters connected therewith.

4. To carry out exploration and to develop and optimize production of hydrocarbons and
to maximize the contribution to the economy of the country. To carry out geological,
geophysical or any other kind of surveys for exploration of petroleum resources; to carry
Summer Internship Report GHPIBM (Batch 2009-11) Page 1

out drilling and other prospecting operations; to probe and estimate the reserve of
petroleum resources; to undertake, encourage and promote such other activities as may
lead to the establishment of such reserves including geological, chemical, scientific and
other investigations.

5. To search for, purchase, take on lease or license, obtain concession or otherwise
acquire any estate or interest in, develop the resources of work, dispose off or otherwise
turn to account, land or sea or any other place in whole of India or in any other part of the
world containing or likely to contain, petroleum, petroleum resources or alternative
sources of energy or other oils in any form, asphalt, bitumen or similar substances or
natural gas, chemicals or any substances used, or which is thought likely to be useful for
any purpose for which petroleum or any oils in any form, asphalt, bitumen or similar
substances or natural gas is, or could be used or to that end to organize, equip or employ
expeditions, commissions, experts and other agents and to sink wells, to make boring and
otherwise to search for, obtain, exploit, develop, render suitable for trade, petroleum,
other mineral oils, natural gas, asphalt, or other similar substances or product thereof.
6. To undertake, assist, encourage or swap or promote the production of petroleum

resources and to carry on in all their respective branches all or any of the business of
producing, treating, (including the redefining of crude oil) storing, transportation,
importing, exporting, swapping and generally dealing in or with, petroleum or other crude
oils, asphalt, bitumen, natural gas, refinery gasses, liquefied petroleum gas and all other
kind of petroleum products, chemicals and any such substances aforesaid.
7. To carry on all marketing and distribution of all kinds of petroleum products and to
purchase or otherwise acquire manufacture, refine, treat, reduce, distil, blend purify and
pump, store, hold transport, use, experiment with market distribute, exchange, supply, sell
or otherwise dispose of, import, export and trade and generally deal in any and all kinds
of petroleum products, oil, gas and other volatile substances.
8. To carry on all or any of the businesses of the sale and purchase of petroleum and other
crude oil, asphalt, bitumen, natural gas, liquefied petroleum gas, chemicals and all kinds
of petroleum products, treat and turn to account in any manner whatsoever petroleum and
other crude oils, asphalt, bitumen, natural gas, liquefied petroleum gas and all kinds of
petroleum products, chemicals and any such substance as aforesaid.
9. To establish, provide, maintain and perform scientific, technical, engineering, project

management, consulting/contacting services including but without limiting to technical
studies, design, construction, maintenance, repair all kinds of works and buildings,
procurement, inspection expediting, management of construction and related services for
petroleum reservoir, storage and transportation of oil, gas and other minerals by pipeline
in or otherwise, seismic data acquisition, interpretation, logging, drilling, cementing,
other oil fields related equipment.
10. To promote, organize, or carry on the business of consultancy services in any field of
activity in which the Company is engaged in or connected therewith.
Oil and Natural Gas Corporation Ltd. (ONGC) has been playing an important role to meet the
energy requirements of the country to meet the rapidly growing demand for petroleum products
in the country. To meet growing energy requirements a New Exploration Licensing Policy
(NELP) has been formulated by the Government of India. The Government of India gives
emphasis for the exploration activity. At present, India's demand for petroleum products is
growing at a rapid rate and it would reach a level of more than 200 MMT by 2008. Oil and
Natural Gas Corporation Ltd. is engaged in exploration and production activities.
ONGC has produced more than 600 million metric tonnes of crude oil and supplied more
than 200 billion cubic metres of gas since its inception. Today, ONGC is India's highest
profit making corporate. It has a share of 77 percent in India's crude oil production and 81
per cent in India's natural gas production.
1.3 Major Achievements of ONGC
i. Judged as Asia's best Oil & Gas company, as per a recent survey conducted by
US-based magazine 'Global Finance'
ii. Ranked as the 2nd biggest E&P company (and 1st in terms of profits), as per the
Platts Energy Business Technology (EBT) Survey 2004.
iii. Leads the list of Indian companies listed in Forbes 400 Global Corporates and
Financial Times Global 500 by Market Capitalization.
iv. Only fully-integrated petroleum company in India, operating along the entire
hydrocarbon value chain.
Products Produced by ONGC (Table No.1)
1. Crude Oil
2. Natural Gas
3. LPG
4. C2-C3
5. LSHS
6. SKO
7. Naphtha
8. HSD
9. ATF

Projected Production of Natural Gas during the 11th Five Year Plan (2007-12)
180
160
140
120
100
80
60
40
20
0
2007-08 2008-09 2009-10 2010-11 2011-12
Source: Draft 11th Five Year Plan Document. (Fig 1)
Diversifications - whether ONGC should enter this or not?

Diversification of Indian energy supply is very crucial to meet the current and the future
energy demand. Natural gas from the wells alone would not suffice, as far as the growing
requirement of the expanding economy is concerned. The companies should pursue the
viable alternatives like gas hydrates, coal bed methane, gas from deep sea, underground
coal gasification (UCG), and gas storage in the upstream side, LNG re-gassification in the
midstream side etc. such diversification will help the company in managing the demand-
supply gap of the country.
1.4 Strategies and Challenges
Challenges
i. Increased Competition within national boundary.
ii. Overseas expansion.
iii. Lack of availability of real time information.
iv. Keep pace with technological advancement
Corporate Strategic goal

i. Doubling of in-place reserves
ii. Improving Average Recovery Factor from 26% to 40%.
iii. Sourcing the fuel from overseas.

1.5 ONGC - SWOT Analysis
Strengths
i. Growing Demographics: The population of the country is increasing at a very
fast pace and to meet the requirement of such a large population the company
gets a motivation to produce more fuel which indirectly increases the
profitability of the company.
ii. Top Technology: ONGC uses the top technology for the drilling and storage
(of only oil) of the fuels produced.
iii. Hard Industry for competitor to enter: Fuel sector requires a lot of capital
investment for the establishment and there are loads of rules and regulations
with respect of the fuels. So entering this industry is not all’s cup of tea.
iv. Strong Infrastructure: ONGC is spread across the India and has a very strong
infrastructure to support its image in the industry.
Weaknesses
i. State owned: As the company is government owned, there are rules and
regulations imposed on it at every step.
ii. Ever changing laws: The company has to cope up with the changing laws
which creates problem when it comes to the pecuniary part.
Opportunities
i. Possible mergers with smaller Cos.: ONGC has already joint ventures with the
giants like GAIL but it would add to the profitability if they enter into such
JV’s with the small companies as well.
ii. Finding alternative fuels before competitor: There is a vast scope in the
alternative fuels in the market. As the fuels we are using are exhaustible, there
should be options open for the consumers as far as alternative fuels are
concerned.
iii. Expanding into more areas.
Threat
i. Threat of alternative fuels: The Company has a strong threat from alternative
fuels. If any other company enters this market then it can create problem for
ONGC as the oil and natural gas resources left are very few in the globe and
can exhaust in the near future.
1.6 Objectives of the Study:
The main objective of this study is to focus on the compressed natural gas and
marketing research for customer satisfaction and preference that are using
piped Natural Gas provided by Charotar Gas and LPG in Vallabh Vidyanagar. The
objectives of the study are given below:
i) To find out the customer satisfaction of the customers using Charotar gas (i.e.
PNG). Wether they are satisfied with the metering and payment system, and
pricing policy.
ii) What are the causes for LPG users for not switching to PNG and if they want to,
then what are reasons which are restricting them for not doing so.

iii) Through this study we can find out or have an idea about the preference of the
customers. That is, what do they prefer and what is the scope for a company to
enter this market in future as the new player which is accepted by the customers
and what are the criteria for that.
iv) To study the impact of the new discoveries (for instance KG-basin) on the pricing
of the natural gas and its market.
v) To study the impact of new collaborations (for instance GAIL and RIL) on gas
market.
vi) To analyze the statistics regarding, global reserves of the natural gas, their
consumption, demand and supply.
1.7 Scope and limitations of the Project:

The limitations of study are listed below:
1. Chances of respondents’ error: The information provided by the respondents

during the study is assumed to be correct, but in reality there are chances that they
may be incorrect due to several problems. So there are chances of respondents’ error.
2. Time Constraint: The time available that is six weeks internship program was not
enough to get detail information about the customers using PNG at large. Hence the
sample size taken for the study was very small i.e. just 25.
3. Sample Size: This study is limited to the primary data and a small sample size has
been taken. Apart from this, responses obtained may not truly reflect the opinion of
consumers.
Target Customers:
The target respondents are customers using PNG and LPG. A well-defined target market
is the first element to a marketing strategy. The target market and the marketing mix
variables of product, place (distribution), promotion and price are the two elements of a
marketing mix strategy that determine the success of a product in the marketplace.
The city taken into the consideration for the purpose of conducting survey is Vallabh
Vidyanagar, Anand.

CHAPTER II
RESEARCH METHODOLOGY
The study was performed for determining the customer satisfaction towards PNG at
V.V.Nagar. The potential customers who are using Charotar gas were interviewed through
the structured questionnaire and their opinion and viewpoints were recorded.
The study was conducted in three steps. Step I begun with the comprehensive study and
analysis of the PNG and LPG in V.V Nagar. Step II involved the survey that was conducted
to collect the opinion and preferences of the customers who are using PNG and LPG. Finally
in Step III data collected were analyzed and interpreted to make the necessary conclusions
and recommendations.
2.1 Type of Research Design
The design of this research is exploratory Research Design whose objective is to explore
or search a problem or situation to provide insights and understanding. This research
design was conducted out in order to find out the responses, perception, attitudes and
opinions of the potential customers towards PNG supplied by Charotar Gas and LPG.
2.2 Population and Sampling
The population for this study includes all the potential customers who use PNG supplied
by Charotar Gas and LPG.
The target population for this study is better defined as
1. Sampling Unit: All those people who are using PNG and LPG services in Vallabh
Vidyanagar.
2. Sampling Frame: - The list of the customers is obtained from the Website of Charotar
Gas and for LPG respondents are house makers (selected randomly).
3. Sampling Techniques:-
From the list, randomly respondents are selected who could be easily accessible and
were in close vicinity. Hence Convenience sampling method is adopted.
4. Sampling Size:25 respondents

5. Year :2010(June)
2.3 Sources of Data
In this study, both primary and secondary data have been used.
1. Primary Data: First hand information and data are collected from the research
conducted through personal interaction with the respondents. For this purpose, a
questionnaire was prepared and 25 respondents were interviewed in the Vallabh
Vidyanagar region.

2. Secondary Data: Secondary data was collected from the sources such as magazines,
newspapers, internet and books as mentioned in bibliography.
2.4 Assumptions
The assumptions made during the study are:
i. The sample used represents the population.

ii. The research instrument used is valid and produces correct result
iii. The respondents answer the questions asked during survey truthfully.
2.5 Scaling Techniques used
There is use of Likert scale, Rank order scale in the questionnaire.

CHAPTER III
GLOBAL AND NATIONAL MARKET SCENARIO OF CNG AND PNG
3.1 Global Energy Scenario (fig 2)
World Natural Gas Reserve by Geographic region as of

January 1, 2009
Middle East 2549
Eurasia 2020
Africa 490
Asia 415
North America 283
Central & South America 262
Europe 167
World total = 6,254 Trillion cubic feet
(Source – Worldwide look at Reserves and Production, “Oil & Gas Journal” Vol. 106, no. 48
(Dec 2008), pp. 22-23 )
The graph (fig 2) shows the world natural gas scenario by geographic region and it is
evident that Middle-East (40.76%) is having the highest reserves of natural gas which is
followed by Eurasia (32.3%), Africa (7.83%), Asia (6.64%), North-America (4.53%),
Central & South America (4.2%) and Europe (2.67%).
This gives us the brief idea about the geographical distribution of the natural gas
worldwide. Asia has only 6.64% of the total word gas reserves around the world and
thus stands at the 4th position in the world ranking.
OIL & GAS PRODUCTION 2009 (fig. 3)
Egypt U.K Kazakhstan

T&T India Tunisia
Thailand Auatralia Bolivia
USA, Canada, Brazil
The above pie chart (fig. 3) shows the contribution of the different countries in the oil
and gas production at the international level. India contributes to about 6% of the total

oil & gas production of the world. The maximum contribution is by Egypt i.e. 25%
which is followed by U.K (24%), Kazakhstan (18%), T&T (13%) and so on.
Production (mmboe)
250
200
Gas
150 Oil
Liquids
100
50
0
2006 2007 2008 2009
Mmboe: Million barrels of oil equivalent (fig. 4)
The above bar graph (fig. 4) shows the production of varous fuels from year 2006 to
2009. There is increase in the liquids and oil production from the year 2006 to 2007 but it
is constant for the years 2007 to 2009. But the gas production has increased over the years
constantly. This shows the demand for the gas is increasing as compared to oil. This
indicates the increas in the gas vehicles in a way.
3.2 Indian Natural Gas Sector Analysis:
India’s association with natural gas dates back to 1886 when oil and gas were found at
Digboi, Assam. But the gas market evolved rather slowly, due to inadequate production
and supplies and until recently India accounted for just 0.5% of the world’s total natural
gas reserves and as we have seen in the above graph that Asia itself covers only 6.6% of
the world’s total gas reserves.
Usage of gas was localized near the production point. The situation changed at a large
after the discovery of a massive oil and gas field off the western coast, Bombay High,
which went into commercial production in 1976. This was soon followed by the South
Basin free gas field in 1978.
Gas occupies about 9% of the total energy basket of the country. However, the scenario is
fast changing in the country, largely because of the expected increase in the availability of
natural gas in the country. This is possible due to the discovery of the gas in the KG-basin
which is expected to be distributed among the Gas Giants in the country like RIL, GAIL,
ONGC, etc.
Natural gas is fast gaining its appropriate place in India’s huge energy basket that
incorporates both renewable and non-renewable energy sources to meet soaring

domestic energy demand. Natural gas is proving its utility in energy as well as non-
energy sectors.
India had set a target of producing 42.28 Billion Cubic Meter natural gas for the year
2009 of which only 32.8 Billion Cubic Meter had been produced. This huge shortfall was
transformed in around 8 Million Metric Tons of LNG imports at comparatively higher
international prices.
The Indian government has further widened demand-supply gap by setting low prices
which put immense subsidy pressure on domestic oil and marketing companies.
Despite intense pressure on oil and marketing companies, Liquefied Petroleum Gas
(LPG), Compressed Natural Gas (CNG) are positioning themselves as a future fuel option
both for industrial and non-industrial sectors in the domestic market.
The number of LPG customers is expected to grow at a CAGR of around 9% to touch 150
Million mark by the year 2013. This will result in a sharp growth of LPG demand,
exerting more pressure on its domestic production and imports.
CNG is also rapidly gaining recognition as cost effective and pollution free green fuel
vehicle. In fact, with close to 0.6 Million vehicles, India stood second in terms of number
of CNG vehicles in the Asia Pacific region behind only Pakistan. The number of CNG
vehicles is expected to grow at a CAGR of 16% during the year 2010–2013 on account of
favorable government policies.
Fig.5
India’s Energy mix (2008-2030)
The above fig.5 shows the share of natural gas in India's energy mix has increased more
than three times since the early 1980s. Energy efficiency, use of gas in multiple
applications, and eco-friendliness are the key factors that are likely to propel further rise
in demand for gas in India.
The increase in demand could be because of the existing uses of natural gas and from
newer applications. A rising demand for gas has its effect on the supply level. An
increased thrust on liquefied natural gas imports would signal positive developments on
the supply front.

It is also expected that the decontrol of the oil sector will enable the existing oil
companies to pursue gas E&P activities more actively which would automatically
increase the production of gas.
The Gas Authority of India Limited, with a monopoly in natural gas distribution, is likely
to benefit from the expected rise in natural gas supplies. Besides, its exposure to price
risks would be minimal because of the fixed nature of natural gas transportation tariffs.
Production & Imports:
Natural Gas in billions of cubic feet. (Fig.6)
From the graph (fig.6) we can interpret that the production and imports for the natural gas
has increased. The increase in the domestic production in the gas is far more than the
increase in the net imports.
This is a good sign for India that imports are comparatively less. In 2004 the production
was 100 units and imports were negligible i.e. around 10-15 units. For the year 2010 the
production is same but the imports has increased to more than 250 units.
This production is expected or forecasted to increase up to 2000 units but on the other
side the imports are also expected to rise up to more than 1500 units (approximately 1515
units of gas).
The increase in the imports may be due to the increase in the demand but the number of
the sites for the gas production is limited and many of them become matured and no more
produce gas and many are isolated so their gas cannot be used many-a-times.
Major Players in the Indian Market: (Table 2)
Company
Public Sector
2 IOC
3 BPCL
4 HPCL
5 ONGC
Domestic Private Players
6 Reliance Industries
International Private Players
7 Shell

8 British Gas (Centrica)
9 Cairn Energy
Source: BP Statistical Review of World Energy – 2007, Capitaline Fortune, Ministry of
Petroleum and Natural Gas, Government of India.
Source: Directorate General of Hydrocarbons, Ministry of Petroleum & Natural Gas, BP

Statistical Review of World Energy.
3.3 Product Description

Natural Gas
Natural gas is a naturally occurring Hydrocarbon formed over millions of years through
the decomposition of organic matter such as trees and animals. It is typically found
trapped underground in reservoirs in either gas pockets or trapped in a substrate such as
sand or oil, and is extracted either as a by-product of oil extraction or specifically as raw
gas. Methane is the main component of natural gas, and usually makes up over 90 percent
of "pipeline quality" natural gas. Other hydrocarbons that may be found in small amounts
of natural gas include ethane, propane, and butane.
Most natural gas consumed in the UK is currently domestically produced in the North
Sea. Gas streams produced from reservoirs contain natural gas, liquids and other
materials. Processing is required to separate the gas from the liquids and to remove
contaminants. First the gas is separated from free liquids such as crude oil, hydrocarbon
condensate, water and entrained solids. The separated gas is then further processed to
meet the specified requirements. A dehydration plant controls the water content; a gas
processing plant removes certain hydrocarbon components to hydrocarbon dewpoint
specifications and a gas sweetening plant removes hydrogen Sulphide and other sulphur
compounds when present. Natural Gas is odourless so odourants are added to give it the
familiar 'gas' smell.
Typical Composition of Natural Gas (Table 3)

Methane CH4 70-90%
Ethane C2H6 0-20%
Propane C3H8
Butane C4H10
Carbon
CO2 0-8%
Dioxide
Oxygen O2 0-0.2%
Nitrogen N2 0-5%
Hydrogen
H2S 0-5%
sulphide
Rare gases A, He, Ne, Xe Trace

Natural Gas Value Chain
Using Brin Tre Mo Distri
techn ging atin ving buting
ology gas g gas and
to to gas with selling
find the to pipe natura
new surf be line l gas
oil ace sent s
resou to and
rces mar tank
kets ers
Fig.7
1. The Exploration section outlines how crude oil / natural gas is found, and how
companies decide where to drill wells for it.
2. The Extraction section focuses on the drilling process, and how crude oil / natural gas is
brought from its underground reservoirs to the surface.
3. The Production section discusses what happens once the well is drilled, including the
processing of crude oil / natural gas once it is brought out from underground.
4. The Transport section outlines how the crude oil / natural gas is transported from the
wellhead and processing plant, using the extensive network of pipelines throughout
North America.
5. The Storage section describes the storage of crude oil, how it is accomplished, and why it
is necessary.
6. The Distribution section focuses on the delivery of crude oil / natural gas from the major
pipelines to the end users, whoever they may be.
Natural Gas Processing
The image below is a schematic block flow diagram of a typical natural gas processing
plant. It shows the various unit processes used to convert raw natural gas into sales gas
pipelined to the end user markets.

The block flow diagram also shows how processing of the raw natural gas yields by-product
sulphur, by-product ethane, and natural gas liquids (NGL) propane, butanes and natural
gasoline (Denoted as Pentane +).
Source: ONGC (website fig.8)
Natural Gas - Uses
Power Generation
Natural gas is a major source of electricity generation through the use of gas

turbines and steam turbines. Most grid peaking power plants and some off-grid engine-
generators use natural gas. Particularly high efficiencies can be achieved through
combining gas turbines with a steam turbine in combined cycle mode.
Natural gas burns more cleanly than other fossil fuels, such as oil and coal, and produces
less carbon dioxide per unit energy released. For an equivalent amount of heat, burning
natural gas produces about 30% less carbon dioxide than burning petroleum and about
45% less than burning coal.
Combined cycle power generation using natural gas is thus the cleanest source of power
available using fossil fuels, and this technology is widely used wherever gas can be
obtained at a reasonable cost. Fuel cell technology may eventually provide cleaner
options for converting natural gas into electricity, but as yet it is not price-competitive.
1. Domestic use
Natural gas is supplied to homes, where it is used for such purposes as cooking in natural
gas-powered ranges and ovens, natural gas-heated clothes dryers,
heating/cooling and central heating.

Home or other building heating may include boilers, furnaces, and water heaters. CNG is
used in rural homes without connections to piped-in public utility services, or with
portable grills.
Natural gas is also supplied by independent natural gas suppliers through Natural Gas
Choice programs throughout the United States. However, due to CNG being less
economical than LPG, LPG (propane) is the dominant source of rural gas.
2. Transportation
Compressed natural gas (methane) is a cleaner alternative to other automobile fuels such
as gasoline (petrol) and diesel. As of 2008 there were 9.6 million natural gas
vehicles worldwide, led by Pakistan (2.0 million), Argentina(1.7 million), Brazil (1.6
million), Iran (1.0 million), and India (650 thousand).
The energy efficiency is generally equal to that of gasoline engines, but lower compared
with modern diesel engines. Gasoline/petrol vehicles converted to run on natural gas
suffer because of the low compression ratio of their engines, resulting in a cropping of
delivered power while running on natural gas (10%-15%).
CNG-specific engines, however, use a higher compression ratio due to this fuel's
higher octane number of 120–130.
3. Fertilizer
Natural gas is a major feedstock for the production of ammonia, via the Haber process,
for use in fertilizer production.
4. Aviation
Russian aircraft manufacturer Tupolev is currently running a development program to
produce LNG- and hydrogen-powered aircraft.
The advantages of liquid methane as a jet engine fuel are that it has more specific energy
than the standard kerosene mixes do and that its low temperature can help cool the air
which the engine compresses for greater volumetric efficiency, in effect replacing
an intercooler. Alternatively, it can be used to lower the temperature of the exhaust.
5. Hydrogen
Natural gas can be used to produce hydrogen, with one common method being
the hydrogen reformer. Hydrogen has various applications: it is a primary feedstock for
the chemical industry, a hydrogenating agent, an important commodity for oil refineries,
and a fuel source in hydrogen vehicles.
6. Other
Natural gas is also used in the manufacture of fabrics, glass, steel, plastics, paint, and
other products.
Storage and Transport
The major difficulty in the use of natural gas is transportation and storage because of its
low density. Natural gas pipelines are economical, but are impractical across oceans.
LNG carriers can be used to transport liquefied natural gas (LNG) across oceans,
while tank trucks can carry liquefied or compressed natural gas (CNG) over shorter
distances.
For LNG transport a liquefaction plant is needed at the exporting end
and regasification equipment at the receiving terminal.

LNG transportation is established as the preferred technology for long distance, high
volume transportation of natural gas, whereas pipeline transport is preferred for transport
for distances up to typically 4,000 km overland and approximately half that distance over
seas.
CNG is transported at high pressure, typically above 200 bars. Compressors and
decompression equipment are less capital intensive and may be economical in smaller
unit sizes than liquefaction/regasification plants. For CNG mode the crucial problem is
the investment and operating cost of carriers. Natural gas trucks and carriers may
transport natural gas directly to end-users, or to distribution points such as pipelines for
further transport.
3.3.1 CNG
Blue diamond symbol used on CNG-powered vehicles
What is CNG?
CNG stands for Compressed Natural Gas and is the term used for methane or natural gas
that has been pressurized to elevated pressures (typically 250 bars). Natural gas remains
in a gaseous state at all times during this pressurization process. In order to maximize the
quantity of stored gas within a given volume (say in a fuel tank) the gas is pressurized to
very high pressures and stored in specialist storage cylinders. Typically the gas is
compressed using high pressure reciprocating compressors.
Compressed Natural Gas (CNG) is a fossil fuel substitute for gasoline (petrol), diesel,

or propane fuel. Although its combustion does produce greenhouse gases, it is a more
environmentally clean alternative to those fuels, and it is much safer than other fuels in
the event of a spill (natural gas is lighter than air, and disperses quickly when released).
CNG may also be mixed with biogas, produced from landfills or wastewater, which
doesn't increase the concentration of carbon in the atmosphere.
CNG is made by compressing natural gas (which is mainly composed of methane [CH4]),

to less than 1% of its volume at standard atmospheric pressure. It is stored and distributed
in hard containers, at a normal pressure of 200–248 bar (2900–3600 psi), usually in
cylindrical or spherical shape.
Compressed Natural Gas (CNG) has been widely used in vehicles since the 1930s, in
countries that include Argentina, Russia and Italy. There are more than 1,050,000
vehicles around the world, which are powered by CNG fuel. It is gaining increasing
acceptance, particularly for city transport vehicles such as taxis, buses and delivery trucks
due to its relative superiority over other conventional fuels.

CNG is a relatively clean fuel with lower emission levels of SOx, NOx and SPM. It is,
therefore, being promoted by the Government of India as a fuel for the transport sector
wise sales tax exemption and a lower custom duty of 5 per cent on imported CNG kits as
against a peak rate of 25 per cent. CNG as an automobile fuel improves engine efficiency.
The running cost of CNG is lower compared to diesel and gasoline. The maintenance cost
is also low due to better fuel quality. The energy content per kg of CNG is very similar to
that of petroleum based fuels, but it has lower energy content per unit of volume. The
excellent knock resisting property of CNG allows for use of a higher compression ratio
resulting in an increased power output and greater fuel economy when compared to
petrol.
CNG can be used in engines with a compression ratio as high as 12:1 compared to normal
gasoline (7.5:1 to 10:1). At this high compression ratio, natural gas-fuelled engines have
higher thermal efficiencies than those fuelled by gasoline. The fuel efficiency of CNG
driven engines is about 10-20% better than diesel engines.
CNG is the least polluting (Table 4)
(gm/100 km)
Fuel/Emissio CO2 UH CO NOx SOx P
ns C M
Petrol 22,00 85 634 78 8.3 1.1
0
Diesel 21,00 21 106 108 21 13
0
LPG 18,20 18 168 37 0.4 0.3
0
CNG 16,27 5.6 22 26 0.2 0.3
5
What are NGV’s?
NGV’s are Natural Gas Vehicles and are standard vehicles that have been modified to run
on CNG. There are three types of NGV’s: Dedicated, Bi-Fuel and Dual Fuel.
Dedicated vehicles run on natural gas only. Bi-Fuel vehicles operate on CNG whilst
retaining the ability to use petrol as a reserve fuel. The engine can operate on either fuel
but not on both simultaneously. The compression ratio of the engine must remain at a
level suitable for petrol. Currently this type of engine is used almost exclusively on
vehicles below 3,500kgs. Dual Fuel engines are derived from diesel engines. A small
amount of diesel is retained as a pilot source of ignition. The primary fuel Natural Gas is
mixed with the incoming air. Dual Fuel engines are auto ignited by compression and
require no spark plugs.
The compressed natural gas is stored on board the vehicle in cylinders installed in the
rear, undercarriage, or on top of the vehicle.

Growth Opportunities in Global Automotive Composite CNG Tank Market 2010-2015
“Growth Opportunities in Global Automotive Composite CNG Tank Market 2010-2015”

- Composites in CNG tank market is expected to grow at double digit rate in coming five
years with focus on weight reduction, fuel efficiency and better vehicle performance.
Over the next 5 years, total composites consumption in CNG Tank market is expected to
continue strong a growth momentum of 10% CAGR i.e. by 2015, and CNG composites
tank market is estimated to grow at a CAGR of 15%. The end product market is expected
to reach above $120 M by 2015.
Global CNG Scenario
South America
CNG vehicles are commonly used in South America, where these vehicles are mainly
used as taxicabs in main cities of Argentina and Brazil. Argentina and Brazil are the two
countries with the largest fleets of CNG vehicles, with a combined total fleet of more than
3.4 million vehicles by 2009.
South East Asia
In Singapore CNG is increasingly being used by public transport vehicles like buses and
taxis, as well as goods vehicles. However, according to Channel News Asia on April 18,
2008, more owners of private cars in this country are converting their petrol-driven
vehicles to also run on CNG – motivated no doubt by rising petrol prices.
South Asia
Pakistan currently has the highest number of vehicles running on CNG in the world
followed by Argentina, Brazil and Iran.
Pakistan also has the highest number of CNG stations in the world numbering more than
2600. Majority of private vehicles have converted to CNG because of cheaper price as
compared to petrol.
Recent hikes in CNG prices have downplayed the ambitious ventures of some of the
stakeholders in this sector. It is expected that price of the CNG and Kits will come down
as competition among the manufacturers grows.
CNG has grown into one of the major fuel sources used in car engines
in India and Bangladesh as well. The use of CNG is mandated for the public transport
system of India's capital New Delhi as well as for the city of Ahmedabad in the state of
Gujarat.
The Delhi Transport Corporation operates the world's largest fleet of CNG buses. Today
many rickshaws as well as personal vehicles in India and Bangladesh are being converted

to CNG powered technology, the cost of which is in the range of $800–$1000. In the
Bangladesh capital of Dhaka not a single auto rickshaw without CNG has been permitted
since 2003.
In India the government raised natural gas prices by more than double to USD 4.20 per
mmBtu (APM gas w.e.f 01.06.2010.
Middle East and Africa
Egypt is a top ten country in the world with more than 128,754CNG vehicles and 124
fuelling stations nationwide. Egypt was also the first nation in Africa and the Middle East
to open a public CNG fuelling station in January 1996.
In Iran as part of a government mandated plan to ensure energy security and to save on
petrol imports a dual track plan of both producing dual fuel vehicles as well as conversion
of existing vehicles to CNG has been undertaken.
As of January 2009, there are some 1.3 million CNG equipped vehicles on the road.
There is also a government mandate that forces local car manufacturers to produce 60%
of all their new vehicles as dual fuel vehicles.
Europe
Italy currently has the largest number of CNG vehicles in Europe. The use of methane
(CNG) for vehicles started in 1930s and has continued off and on until today.
Since 2008 there has been large market expansion for natural gas vehicles (CNG and
LPG) caused by the rise of gasoline prices and by the need to reduce air pollution
emissions.
In Italy there are more than 800 CNG stations.
In Germany, CNG-generated vehicles are expected to increase to two million units of

motor-transport by the year 2020. The cost for CNG fuel is between 1/3 and 1/2
compared to other fossil fuels in Europe.
In Portugal there are 4 CNG refueling stations but 3 of them do not sell to the public.
Only in Braga you can find it on the local city bus station (TUB)
CNG USES:
4. CNG is used in traditional gasoline internal combustion engine cars that have been

converted into bi-fuel vehicles (gasoline/CNG). Natural gas vehicles are increasingly
used the Asia-Pacific region, Latin America, Europe, and America due to rising
gasoline prices. In response to high fuel prices and environmental concerns, CNG is
starting to be used also intuk-trucks and pickup trucks, transit and school buses,
and trains.

5. CNG's volumetric energy density is estimated to be 42% of LNG's (because it is
not liquefied), and 25% of diesel's.
6. CNG can be used in Otto-cycle (gasoline) and modified Diesel cycle engines. Lean-

burn Otto-cycle engines can achieve higher thermal efficiencies than stoichiometric
Otto-cycle engines and very low NOx emissions due to lower combustion
temperature.
7. A suitably designed natural gas engine may have a higher output compared with a
petrol engine because the octane number of natural gas is higher than that of petrol as
this would allow for an engine design with a higher compression ratio.
8. CNG may be refuelled from low-pressure ("slow-fill") or high-pressure ("fast-fill")

systems. The difference lies in the cost of the station vs. the refuelling time. Fuelling
a vehicle from a home natural gas fuel line is becoming more popular in the United
States, especially in California and New York, and tax credits are available for
installing the necessary appliance.
9. CNG cylinders can be made of steel, aluminium, or plastic.

Lightweight composite (fibre-wrapped thin metal / fibre-wrapped plastic) cylinders
are especially beneficial for vehicular use because they offer significant weight
reductions when compared with earlier generation steel and aluminium cylinders,
which leads to lower fuel consumption. The CNG cylinders bundled with safety-
valve generally follow the ISO 11439 standard.
10. The equipment required for CNG to be delivered to an Otto-cycle engine includes

a pressure regulator (a device that converts the natural gas from storage pressure to
metering pressure) and a gas mixer or gas injectors (fuel metering devices). Earlier-
generation CNG conversion kits featured venturi-type gas mixers that metered fuel
using the Venturi effect. Often assisting the gas mixer was a metering valve actuated
by a stepper motor relying on feedback from an exhaust gas oxygen sensor.
11. Newer CNG conversion kits feature electronic multi-point gas injection, similar to
petrol injection system found in most of today’s car.
CNG ADVANTAGE:
1. Due to the absence of any lead or benzene content in CNG, the lead fouling of spark
plugs is eliminated. CNG-powered vehicles have lower maintenance costs when
compared with other fuel-powered vehicles.
2. CNG fuel systems are sealed, which prevents any spill or evaporation losses.
3. Another practical advantage observed is the increased life of lubricating oils, as CNG
does not contaminate and dilute the crankcase oil. CNG mixes easily and evenly in
air being a gaseous fuel.
4. CNG is less likely to auto-ignite on hot surfaces, since it has a high auto-ignition
temperature (540 °C) and a narrow range (5%-15%) of inflammability.
5. CNG produces significantly lesser emissions of pollutants like carbon
dioxide (CO2), hydrocarbons(UHC), carbon monoxide (CO), nitrogen
oxides (NOx), sulfur oxides (SOx) and particulate matter (PM), as compared to
petrol .
6. For example, an engine running on petrol for 100kms emits 22,000 grams of CO2,
while covering the same distance on CNG emits only 16,275 grams of CO2. The
corresponding figures are 78 and 25.8 grams respectively, for nitrogen oxides.
Carbon monoxide emissions are reduced even further.
7. Due to lower carbon dioxide and nitrogen oxides emissions, switching to CNG can
help mitigate greenhouse gas emissions.
8. The ability of CNG to reduce greenhouse gas emissions over the entire fuel lifecycle
will depend on the source of the natural gas and the fuel it is replacing. The
lifecycle greenhouse gas emissions for CNG compressed from California's pipeline
natural gas is given a value of 67.70 grams of CO2-equivalent per megajoule
(gCO2e/MJ) by the California Air Resources Board (ARB), approximately 28%
lower than the average gasoline fuel in that market (95.86 gCO2e/MJ).
CNG produced from landfill biogas was found by ARB to have the lowest greenhouse
gas emissions of any fuel analyzed, with a value of 11.26 gCO2e/MJ (over 88% lower
than conventional gasoline) in the low-carbon fuel standard that went into effect on
January 12, 2010.
WHY CNG?
Natural gas has many benefits to offer its users. The main advantages are:
 Clean fuel
 Very low levels of pollution
 Cheap fuel
 Far more economical than use of petrol.
The table below shows the consumption pattern of CNG in different sectors for
different cities.
Location Company mmscmd CNG Domesti Industrial Commercial
Vehicles c
Delhi IGL 2.3 134608 107487 - 400
Vadodara GAIL 0.021 3222 - - -
Vadodara GAEL 0.075 75000 - 70 -
Ahmedaba GAEL 0.45 43500 20000 220 200
d
Surat, GGCL 4 50000 200000 800 2500
Ankleshwa
r
Gujarat GSPC 1.025 - 20813 230 55
Gas
Mumbai MGL 2 179720 297163 40 882
Lucknow CUGL 0.056 8290 - - -
Kanpur CUGL 0.01 7400 400 - -
Agra GGL 0.0249 4048 - - -
Agartala TNGCL 0.0001 41 - - -
Vijayawada BGL 0.012 2000 - - -
Hyderabad BGL 0.0076 1700 - - -

Total 9.9816 509529 645863 1360 4037
Domestic Production
In India there was a boom during the period between 1980 to 1996, during this period the
gas production grew to ten times that is from 2.36 bcm to 22.64 bcm and this was
because of the flaring of gas during that period was reduced to 68.5% at one go. During
the period of 1997- 2007 the overall annual growth rate remained stagnant because the
flaring was almost constant. The utilization rate has increased from 93.7% in 1995-96 to
about 97.2 in 2005-06.
CNG - VALUE CHAIN ANALYSIS:
Casket
PRODUCTIO Supply Station COMPRESSIO Casket Retailer
CONSUME
CNG Vs LNG:
 CNG is often confused with liquefied natural gas (LNG). While both are stored forms
of natural gas, the key difference is that CNG is gas that is stored (as a gas) at high
pressure, while LNG is in uncompressed liquid form.
 CNG has a lower cost of production and storage compared to LNG as it does not require
an expensive cooling process and cryogenic tanks.
 CNG requires a much larger volume to store the same mass of gasoline or petrol and the
use of very high pressure (3000 to 4000 psi, or 205 to 275 bar).
3.3.2 PNG (Piped Natural Gas):

Presently allocation of gas to MGL for domestic PNG and CNG is 1.4 MMSCMD and
demand for these categories of customers is more than 1.4 MMSCMD. The quantity of
gas supplied to domestic, commercial and industrial customers of MGL is 0.065
MMSCMD, 0.065 MMSCMD and 0.035 MMSCMD respectively.
The demand for natural gas in the country is more than the availability. In order to bridge
the gap between demand and supply of natural gas, Government has adopted a multi
pronged strategy.
These cover:-
i. Intensification of domestic E&P activities

ii.Exploitation of unconventional sources like Coal Bed Methane (GBM)
iii.
Underground coal gasification
iv.Implementation of Natural Gas Hydrate Programme (NGHP) for evaluation of
hydrate resources and their possible commercial exploitation
v. LNG imports & Gas sourcing through transnational gas pipelines.
Comparison of CNG with PNG:
GAIL, along with other vital CGD players, is implementing the CGD projects taking into
consideration the benefits of both the economical and technical benefits of PNG and CNG.
Sr.No. CNG PNG
1 Economical Safe and assured supply of gas to domestic,
commercial and industrial sectors
a. Cheaper than Convenient to use
conventional fuel
b. Payback period is short Economically more viable compared to other fuels
in same sector
2 Technical No traffic disruption as supplied through pipelines
a. Very high antiknock Continuous supply
power (more than 120
ON) allows greater
performance compared
to petrol one
b. Does not require No wastage, no underweight cylinders, no hassle
refining plant or additive for replacement of cylinder, no need for cylinder
adding and can be used booking
immediately after its
extraction
c. It has no evaporation No advance payment for consumption of gas,
leaks and spills of fuel, billing will done in once in two months based on
both during refuelling consumption
and feeding of the car
d. Its combustion produces a very low quantity of
carbon deposits (permits a longer life of lubricant
oil)
India’s reserve are likely to last for around 30 years, but at the same time the world reserve would
last for 67 years. ONGC accounts for 60% of these reserves with 990 bcm gas, while Oil India

Limited (OIL) accounts for another 10% with 170 bcm and other private players and joint ventures
accounts for 30% with about 483 bcm. Of the total supply of gas, offshore fields contribute 72%
and onshore fields contribute 28%. In the last five years the supply of gas has risen by 35% that is
form 84 mmscmd per day during 2003-04 to 114 mmscmd during 2007-08.
Benefits of PNG -
PNG is Convenient
i. 24 hours uninterrupted gas supply,

ii. No changing or handling of gas cylinders,
iii. No more last minute emergency,
iv. Simply, do away with cylinders and its associated problems,
v. Make payments after you consume, through banks, drop boxes, ECS, Net, etc.,
vi. PNG is Economical,
vii. PNG works out to be up to 10% cheaper than LPG,
viii. 14.2 kg. LPG is equivalent to 18 units of Natural Gas shown in your meter.
ix. At present, price of LPG is Rs. 255/- you consume Gas costing Rs. 205/- only, saving Rs. 50/-
(approx.) every time. (Above figures are indicative.)
PNG is Safe
Natural Gas catches fire only when it forms a 5-15% mixture with air whereas LPG catches fire when it
forms 2% or above mixture with air.
PNG is Clean
i. Being a gaseous fuel, very clean compared to any other fuel with more than 94%.
ii. Combustible particles.
iii. Burns with a flame always hence, no blackening of vessels.
iv. Sulphur content less than 10 PPM.
v. Most preferred fuel in vehicles in Mumbai today.
vi. Contribution for a cleaner society.
PNG is versatile
i. Apart from cooking, other appliances like geyser, air conditioner, vehicles etc. can be used on
Natural Gas.
ii. PNG is the fuel of choice around the world.

CHAPTER – IV
NATURAL GAS REGULATORY STRUCTURE
4.1 PNGRB Functions & Regulations
Protect consumer
interest by fostering
Perform other Regulate access &
fair trade &
transportation rate on
functions entrusted by competition common / contract
central govt.
carrier / CGD network.
Lay down technical Register &

standards/specifica Authorize entities
tions
Functions of Declare pipeline as
Maintain common/contract
the Board
databank of carrier.
information.
Monitor prices & Enforce retail &

prevent restrictive marketing service
Ensure adequate
trade practices obligation.
availability, &
equitable distribution
PNGRB Act:-
An Act to provide for the establishment of Petroleum and Natural Gas Regulatory Board to
regulate the refining, processing, storage, transportation, distribution, marketing and sale of
petroleum, petroleum products and natural gas excluding production of crude oil and natural
gas so as to protect the interests of consumers and entities engaged in specified activities
relating to petroleum, petroleum products and natural gas and to ensure uninterrupted and
adequate supply of petroleum, petroleum products and natural gas in all parts of the country
and to promote competitive markets and for matters connected therewith or incidental
thereto.
Gujarat Gas Act:
It mainly focuses on:

• Regulation and transmission of gas through pipelines in the state of Gujarat.
• Provision for setting up of a regulatory authority to monitor transmission, distribution
and licensing for retail distribution.
• Creation of common carrier transmission facility for gas available in Cambay and
Tapti basin.
• Provision for formation of a nodal agency “Gujarat State Petronet Ltd. (GSPL)” as the
sole ‘Operator’ of the gas network within the state.
4.2 Natural Gas Pricing – History
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. The gas supplies through GAIL network to non-APM consumers will be at the
price at which GAIL buys from JV producers at landfall point, subject to a ceiling of
ex-Dahej RLNG price of US$3.86/MMBTU for the current year i.e. 2005-06. For the
North-East region, Rs.3200/MCM will be considered as the market price during 2005-
06.
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 North-East
region will increase from the existing price of Rs.1700 to Rs.1920/MCM.
v. Subject to the determination of producer price, based on the recommendations
of the Tariff Commission, any additional gas as well as future production of gas from
new fields to be developed in future by ONGC/OIL will be sold at market-related
price in the context of NELP provisions.
Natural gas pricing – Now
The government has classified the fertiliser segment under the priority sector for gas
distribution. The gas is available at $1.89 per million British thermal unit (mmbtu)
(landfall price) for the priority sector while for the non-priority it is fixed at $3.86 per
mmbtu. This is called as administered price mechanism gas (APM).
Recently, Reliance Industries Ltd (RIL) struck gas reserves in the Krishna-Godavari basin
(KG) and fixed its price at $4.2 per mmbtu. This price is much higher when compared to
APM gas. Also the price of pooled LNG has been decided at $4.95 per mmbtu for

consumers across the country. Hence, APM pricing will not be sustainable in future and
the fertiliser sector has to move to RLNG or KG basin for their gas needs. Thus, the cost
for the companies is set to increase.
 After a 5-year long deliberation, the Cabinet, more than doubled the price of

gas under the administered pricing mechanism (APM) to USD 4.2 million British
thermal units (mmBtu), the price at which Reliance Industries sells its gas at from
KG-D6.
 The Oil Ministry wanted a 44% hike from USD 1.79 mmBtu to USD 2.6 mmBtu. The
government has gone ahead more than doubled the price to USD 4.2 mmBtu.
Published on Thu, May 20, 2010 at 15:00 Source: CNBC-TV18, Site: Moneycontrol.com
The average retail price of CNG will go up by Rs 5.60 per kg while the price of PNG will
be hiked by In a bid to compensate state-owned oil and gas explorers such as the Oil and
Natural Gas Corporation Limited and the Indian Oil Corporation Limited, the cabinet last
month virtually doubled the APM price of natural gas and brought it almost on a par with
the price being charged by private explorers.
The process for hiking retail prices of CNG and PNG was kicked off as soon as the
Centre on June 1 notified the cabinet decision to more than double the APM price of
natural gas.
While Indraprastha Gas Limited (IGL), which is a subsidiary of the GAIL, supplies CNG
and PNG in the National Capital Region, the Mahanagar Gas Limited(MGL) distributes
these two fuels in Mumbai.

CHAPTER – V
NATURAL GAS – DEMAND/SUPPLY AND CGD OVERVIEW OF INDIA
As per the Hydro-Carbon Vision 2025, the estimated demand in the country for natural
gas is as below:-
Demand
Year
(MMSCMD)
2006-07 231
2011-12 313
2014-15 331*
2019-20 361*
2024-25 391
300 279
250
200 170
150
100
50
0
2007-08
2011-12
Source: XI Planning Commission Working Group Report
The graph shows the natural gas demand from the year 2007 to 2012. There is the
increase in the demand of the natural gas with a CAGR of 11.7 percentage.

Natural gas demand-supply balance
Source: CRISIL Research
The demand and supply of the natural gas are expected to match in the coming years in
fact from this year (2010) only. This could be possible due to the new discoveries and the
increase in the imports of the gas from other countries.
In the near future the supply is expected to exceed the demand for the gas and both
demand and supply have a extreme thin line difference between them with supply
winning over the overall demand.

The graph shows the demand estimate of the different sectors like Power, Industrial,
Fertilizer and City Gas. This shows the demand for city will increase considerably in the
coming years. But the other sectors are increasing as well and at a very fast pace as
compared to the gas sector.
Energy Demand:
The factors determining future energy demand in the EU27 include:
i. continued economic growth of more than 2% p.a.,

ii. Hardly any rise in population,
iii. Oil prices remaining at a high level,
iv. Gas prices determined by market forces,
v. increased environmental awareness in politics and among consumers,
vi. growing trend to save energy and to improve energy efficiency,
vii. thoughts at national level to use nuclear energy and expand the use of renewable.
World Natural gas Consumption by Region:
Trillion Cubic feet

80
70 OECD
60 Non-OECD Europe
50 & Eurasia
40 Other Non-OECD
30
20
10
0
2004 2010 2015 2020 2025 2030
Sources: Derived from Energy Information Administration (EIA), International Energy
Annual 2004 (May-July 2006),
Growing market share expected for natural gas

Over the period the share of natural gas is expected to reach 30% of the Primary energy
consumption.

This can be also read as
2005- 241%
2010- 260%
2015- 274%
2020- 288%
2025- 297%
2030- 301%
Because of “its green properties” and highly efficient application technologies, natural
gas will remain the fuel of choice and will continue to make a growing contribution to
energy supply in the EU27.
Natural gas can play an important role as a bridging fuel to a sustainable energy future
over the coming decades. Natural gas consumption in EU member states is expected to
increase from 438 mtoe in 2005 to 625 mtoe in 2030, which is an increase of 43%.
The share of natural gas in the European primary energy demand will rise from 24% in
2005 to 30% in 2030 (18% in 1990). At 60% of the total demand increase, most of the
growth will come from power generation.
EU27 Natural Gas demand outlook by sector
1. Residential and commercial sector

In the residential and commercial sector, gas consumption has steadily increased in line
with the
expansion of the infrastructure and the associated rise in the number of gas users. Over
the last 15 years, gas consumption has seen a 2.8% growth p.a. to 175 mtoe. Gas currently
holds a market share of approx. 35 %, which makes it the market leader in this sector.
In 2005, approx. 80 million homes in the EU27 were supplied with gas. In the future, the
population in the EU27 will grow only moderately. In some countries it is even likely to
decrease.
Further market penetration in this market segment will also slow down considerably.
The reasons are:

1. Firstly, there is already high market penetration in some major gas consuming
countries, as over time other countries will also reach gradually saturation in the
residential and commercial market.
2. Secondly, the low population density, settlement structures and topographical
conditions in some countries set relatively narrow economic limits to greater market
penetration.
3. Further factors likely to limit gas demand include the improved energy efficiency of
buildings, either through the implementation of better thermal insulation standards or
the use of new heating systems with higher energy efficiencies or, in some countries,
increased competition from renewables. All these factors are likely to slow down
volume growth quite substantially.
4. Until 2030, Eurogas expects gas sales to increase by only 0.4%/a to 194 mtoe.
Industrial sector Gas currently accounts for 33 % of industrial final energy
consumption (excluding industrial power stations) and is thus a major source of
energy in this market, too. This sector is traditionally successful in energy
conservation. Given the strong international competition facing the European
industry, the sector had to adapt and decrease its production costs. This explains the
continuous investments necessary to renew the production plants. This trend is likely
to continue in the future.
2. Industrial sector:
Gas currently accounts for 33 % of industrial final energy consumption (excluding
industrial power stations) and is thus a major source of energy in this market, too. This
sector is traditionally successful in energy conservation. Given the strong international
competition facing the European industry, the sector had to adapt and decrease its
production costs. This explains the continuous investments necessary to renew the
production plants. This trend is likely to continue in the future.
Conclusion: the increase in energy consumption due to production developments will

largely be
cancelled out by efficiency-improving investments in plant modernization and
replacements.
In this sector, the price of energy plays an important role and only if natural gas can be
supplied at competitive prices would gas be in a position to expand its market share and
its sales volumes at the expense of oil and coal. On this assumption and with some
support from emissions trading, gas sales to industry could be increased by some 1%/a to
156 mtoe until 2030.
India’s Natural Gas Supply:

India has three options to meet the anticipated growth in natural gas consumption over the
period to 2025 — increase domestic gas production; increase LNG imports; and introduce
pipeline natural gas imports.
India’s current gas producing fields are maturing and are expected to decline in the
coming years. India has significant reserves of natural gas, including recently discovered
fields in the Krishna-Godavari Basin that have the potential to significantly expand
domestic gas production.
India will need to source additional gas supplies via imports. The requirement for
additional gas is projected to reach around 4 billion cubic meters a year (3 million tonnes)

in 2015, expanding to 32 billion cubic meters a year (23 million tonnes) in 2025. The
additional gas requirements will be even greater in the high economic growth scenario.
India's Potential Natural Gas Supply Options

80
70
60 Contracted Natural gas
50 Supply
40 domestic gas production
Additional gas required
30
20
10
0
2005 2015 2020 2025
Assuming India’s additional gas import requirements are all met by LNG, India’s total
LNG imports in the reference case could reach 10 million tonnes in 2015, 21 million
tonnes in 2020, and 31 million tonnes in 2025.
CGD Overview of India
With the emphasis being laid on a cleaner environment and lower pollution levels in
cities, CGD is expected to get a push in the coming years. Thus, apart from GAIL, a few
players have drawn up ambitious plans to roll out city gas infrastructure across a number
of cities in the country.
The main driver for the development of gas transmission and CGD shall be the
availability of requisite volumes of gas. With the development of RIL's KG Basin and
other fields, opportunities are available but the challenge is whether the CGD license-
holders can obtain gas supplies and develop gas distribution infrastructure. The Indian
CGD players are shown in the figure.
Table: Showing the chronological movement in CGD market in India
Year City Company

1880 Calcutta Calcutta Gas company
1900 Mumbai Bombay Gas Company
1972 Vadodara Vadodara Municipal
Corporation
1980 Delhi Delhi Municipal
Corporation
1982 ONGC colony – Mehsana, ONGC
Sibsagar
1985 Duliajan Assam gas company
1986 Sibasagar Assam gas company
1989 Surat, Ankleshwar, Gujarat Gas Company Ltd.
Bharauch
1994 Mumbai Mahanagar Gas ltd.

1995 Delhi Indraprastha Gas
2004 Vadodara, Ahmedabad Adani
2005 Hyderabad Bhagayanagar gas
2006 Kanpur, Lucknow CUGL & GGL
2006 Gandhinagar, Kadi, GSPC/ SGL
Mehasana, Rajkot, Vapi,
Morbi
Few years ago CGD was limited to only Mumbai and Delhi, but today we have 25 cities
where the infrastructure for CGD has been developed. Some of the major cities are Delhi,
Mumbai, Ankleshwar, Baruch and Surat, Vadodara, Agartala, Vijaywada, etc.
For the year 2007-08 CGD contributed 7% of the total gas demand in India. The demand
was 12.08 mmscmd. Gujarat as a state is the largest consumer of CGD with a
consumption of 5.57 mmscmd which is about 55% of the total consumption of CGD.
Delhi and Mumbai are the next two largest consumers with 2.3 mmscmd and 2 mmscmd
respectively.
The total consumption was consumed by 509000 vehicles through over 375 CNG station,
about 645000 domestic consumers, 1300 industrial and 4000 commercial customer. The
penetration of CGD has been limited as currently CNG is distributed through only 1% of
the total 35000 retail outlets of other transport fuels.
CGD's in India:
Assam Assam Gas Company

Baroda Baroda Municipal
Corporation
Surat, Bharuch, GGCL
Ankleshwar
Mumbai MGL
Delhi IGL
Ahmedabad & Baroda Adani energy
Morvi, Gandhinagar GSPC, BPCL, SGL
Objectives of developing CGD Network
i. Consumers to get assured supply of CNG and PNG at cheapest possible price.
ii. Domestic PNG and CNG to be priority - both in terms of pricing & gas volumes.
iii.Incentivize maximum possible coverage for domestic PNG and CNG.
iv. Quickest geographical spread (overall network coverage) during exclusivity
period.
v. Monitor progress against measurable (with penal provisions, including
termination of authorization for failure to achieve commitments.
vi. Post-exclusivity, CGD network available to multiple players for marketing of
PNG, CNG and if required, laying and building network as well.

Constraints
The biggest constraint is that the limited allocation of gas for CGD. It has to compete
with bulk consumers like power and fertilizers as well as petrochemicals. Moreover lack
of adequate transmission and distribution infrastructure connecting the demand and
supply regions within the country is a major constraint.
CGD Infrastructure:
City Gate Station
i. The natural gas that is received at the City Gate Stations is mostly passed through a
cleaner to remove liquids and dust. The primary function of the city gate station is to
measure the amount (volume) of incoming gas. It is generally measured through
orifice meters.
ii. Another function is to reduce the pressure of the gas to be sent for distribution, as the
distribution system requires much lesser pressure than that in long distance
transmission. Mechanical devices called pressure regulators lower the gas pressure
and helps to control the flow rate to maintain desired pressure level throughout the
distribution system.
iii. With the reduction in pressure, the natural gas also becomes cooler, so sometimes it
has to be heated up in regions where the temperature is below zero degree.
iv. Last but not the least, at the City Gate station, the odourization of the natural gas takes
place. Different types of odorants are used, so that the “smell” makes the presence of
the escaping, un-burnt gas recognizable at very low concentrations. This serves as a
warning well before the gas accumulates to hazardous levels; a mixture of air and
natural gas are explosive over the range of 5% to 15% natural gas. To ensure safety,
odorized natural gas is detectable at concentration of just 1%.
The piping system also forms a major part in City Gas Distribution. Mainly there are 4
types of piping systems other than supply mains:-
i. Feeder mains transport gas from the pressure regulator or supply main to the
distribution mains. Feeder mains might also have some lines connected to large
industrial users.
ii. Distribution mains supply gas primarily to residential, commercial, and smaller
industrial consumers.
iii. Service lines deliver gas from the distribution main in the street to the consumer’s
meter. Service lines are usually the property and responsibility of the utility.
However, some utilities own only the portion of the service lines in the public
domain.
iv. Fuel lines are customer piping beyond the meter to various appliances. These lines
are the property and responsibility of the building owner.

The Future of CGD in India:
i. With the Petroleum and Natural Gas Regulatory Board in position and good prospects of
new gas finds in India the future of CGD Project is expected to see an asymptotic
growth.
ii. There are proposals for extending the existing transmission pipe line network from
nearly 7000 Kms to more than 10000 Kms in the coming years and subsequently to
15000 plus Kms.
iii. An exercise done by the one of organizing company indicates that around 130
cities/towns are expected to get city gas project in various stages in next XI – Five Year
Plan.
iv. To summarize with, there would be a lot of opportunities in India for all stakeholders
associated with City Gas Distribution Projects. This Eurasian conference cum exhibition
is the first endeavour to bring various stakeholders together for mutual benefits.
Domestic Sector in CGD:

i. The state (Gujarat) has the highest number of oil and gas fields, both onshore and
offshore, in India (31.3 per cent).
ii. Nearly 36.6 per cent of India‘s installed refining capacity is in the state of Gujarat,
which is the highest in India.
iii. Proximity to Middle East gas sources and an attractive northern market makes Gujarat
a potential gas supply hub.
Location Activity
Jamnagar RIL refinery —
third-largest in the
world, Essar
Refinery
Dahej Petronet LNG‘s re-
gasification
terminal
Hazira Shell and Total‘s
LNG terminal
Vadodara IOC Refinery
Gandhar ONGC‘s Gas
Processing
Complex

CHAPTER – VI
ALTERNATIVE FUELS
Main alternative fuels:
i. Ultra Low Sulphur Diesel – This is diesel fuel that meets either the Euro4
specification or the fuel spec proposed by the Commonwealth for implementation 4 in
2006. Euro4 fuel specs were published in Directive 98/70/EC of the European 5
Communities in 1998, and set the sulphur level as being lower than 50 ppm. This has
already replaced conventional diesel which has a level of >1000 ppm and will replace
low sulphur diesel which is now widely available but which has a sulphur content of
<500 ppm.
ii. Biodiesel & Biogas – Biodiesel is a generic name for fuels obtained by
transesterification of a vegetable oil. This produces a fuel with very similar
combustion properties to pure diesel, but with lower viscosity. Biodiesel often refers
to rapeseed oil methylester (RME), the main European Biodiesel. Esterified Soybean
oil is the main United States source of such fuel, called Soy Diesel.
iii. Liquefied Natural Gas – LNG is also Natural Gas but in a liquefied state. Methane
liquefies at –161 Deg C and is generally refrigerated to –180 Deg C for liquefaction
and requires vacuum-insulated cryogenic tanks to maintain it in liquid form for
storage.
iv. Liquefied Petroleum Gas – LPG consists mainly of propane, propylene, butane and
butylene, in various proportions according to its place of origin. The components of
LPG are gases at normal temperatures and pressures, but can easily be liquefied for
storage. This is achieved by either an increase in pressure to about 8 atmospheres or
by a reduction in temperature.
v. Hydrogen – Hydrogen is the chemical element with the smallest molecular mass and
is not found as a free element on earth. Because of its high reactivity, it is always
bonded to other molecules and as a result hydrogen for automotive use has to be
manmade. Vehicles can burn pure hydrogen in an internal combustion engine, or use
it in a fuel cell to drive an electric motor. The fuel cell option is generally considered
preferable for the long term because although it requires more complex changes to
existing vehicle design, it allows for higher efficiency and hence a longer range on the
same amount of fuel.
vi. Electric - Many electric vehicles are in use such as Forklift trucks, milk floats and
some small passenger vehicles etc. Most electric vehicles suffer from a reduced
operating range and require frequent recharging and therefore limit this option to
localised inner city transport. Hybrid vehicles, such as Electric/Gas will help to
increase the range of these vehicles in the future.

Comparison of Fuels:
i. Comparison of Energy Content
Energy content per unit of fuel (energy density) is an important factor affecting range and
power output of internal combustion engines. The following chart compares the energy
content of alternate fuels.
120 110
100
100
74
80 66 66
60 49
40 25
20
0
CNG Methanol LNG ETHANOL LPG GASOLINE DIESEL
ii. Comparison of Auto Ignition Temperature
The auto ignition temperature is the temperature at which a fuel will ignite without the
need for a spark or flame. In respect to auto ignition temperature LPG, CNG, and LNG
are much safer than gasoline or diesel because the auto ignition temperature is much
higher. The following chart compares the auto ignition temperature of various fuels.
1200 1004
1000 842 842
800
540
600 428 437 450 450
400 220 225
200
0
Gasoline Diesel CNG LNG LPG
Celsius Fahrenheit

iii. Comparison of Flammability Range
The flammability range is the distance from the leanest (LEL - Lower Explosion Limit) to
the richest (UEL - Upper Explosion Limit) mixture of fuel and air that will burn. Fuels
with narrower ranges are safer to work with but are less versatile because they offer less
choice of air to fuel ratios. The following table compares the flammability range of
various fuels.
78.5
80
70
60
50
40
30
20 13 13
8.3 9.7
4.9 6.2
10
0
Diesel Gas LPG CNG Ethanol Methanol Acetylene
Flammability Range
iv. Comparison of Peak Flame Temperature
The following chart compares the peak flame temperature of various fuels. You can see
that CNG (Compressed Natural Gas) has a peak flame temperature of 1790 C & 3254 F
which is 187 C & 337 F or 9.5% cooler than the peak flame temperature of gasoline at
1977 C & 1591 F. The peak flame temperature of propane at 1991 C & 3614 F is only
13 C & 23 F or less than 1% higher than gasoline.
4000 3729
3591 3614
3500 3254
3000
2500 2054
1977 1990 Fahrenheit
1790
2000 celsius
1500
1000
500

v. Comparison of Volumetric Efficiency
The amount of air entering an engine at a particular throttle angle and load is fixed. Any
fuel added to the air before it enters the cylinder will displace an equal volume of air and
will reduce the volumetric efficiency and power output of the engine. The table below
illustrates the reduction of volumetric efficiency of various fuels.
Reduction in Volumetric Efficiency
14
12
10
0
Diesel Gas LPG Ethanol CNG Methanol

CHAPTER – VI
6.1 CHAROTAR GAS - Introduction
Charotar Gas Sahakari Mandali Ltd. is the first Co-Operative Sector in India in area of
“City Gas Distribution”.
They have Gas supply from Gujarat State Petroleum Corporation Ltd.(GSPCL) since
November 2004. This service is in great demand among industrial, commercial,
educational & Religious Institutes and Trusts and Domestic customers due to its
uninterrupted supply.
Charotar Gas Sahakari Mandali Ltd. has been founded in year 1999 and the first in “City
Gas Distribution” in Co-Operative Sector in India. They supply Natural Gas to both
domestic and Small Scale Industry (SSI) sector. They have acquired the gas distribution
rights for Anand, Ahmedabad and Kheda district of Gujarat.
They are planning to cover entire Anand city in the coming year which can be considered
as part of Gujarat Government’s dream to transform Gujarat as PETRO CAPITAL of the
country.
They have signed an MOU with GSPC on 12-01-2007 at “VIBRANT GUJARAT 2007”
in presence of Hon. Chief Minister Shri Narendra Modi with a proposal to be part of the
development projects of Gujarat Government for expansion of Network and opening of
CNG station in the area.
Charotar Gas is very shortly commissioning CNG Storage and Filling Station under
franchisee agreement with GSPC gas Co. Ltd., adjoining their gas office at Vitthal
Udyognagar.
The Anand-based Charotar Gas Sahakari Mandali Ltd (CGSML), India’s only city gas
distributor (CGD) in the cooperative sector and piped gas supplier to eight villages, has
joined hands with hydrocarbon major Gujarat State Petroleum Corporation Ltd (GSPC) to
enter the compressed natural gas (CNG) business and supply piped gas to Amul for its
chocolate plant.
Charotar Gas is also planning to double its gas supply, sourced from GSPC, to one lakh
standard cubic metres a day (scmd) in the next couple of months, according to Mr A.J.
Parmar, Managing Director. The cooperative body has lined up an investment of Rs 10
crore for extension of gas pipeline to its new mother plant between Ahmedabad and
Vadodara from where it would supply both the CNG filling station as well as the Amul
chocolate plant.

Investment:
i. Charotar Gas, which had signed a memorandum of understanding (MoU) with the
Gujarat Government during the Vibrant Gujarat Global Investors’ Summit (VGGIS)
in January this year, has planned to invest Rs 13 crore in the next two years for
expansion of its CGD and CNG business in Anand and adjoining areas such as Kheda
district and outskirts of Ahmedabad district.
ii. This work is expected to be completed by 2011.
iii. It has also signed an MoU with Gujarat Cooperative Milk Marketing Federation
(GCMMF), which owns the Rs 10,000-crore brand Amul, to lay a 15-km pipeline in
the next two months between villages Gaana and Chikodhara where the chocolate
plant is located.
iv. Charotar Gas, established in 1999, currently has a 65-km-long gas pipeline between
Bavla in Ahmedabad district and Anand.
v. Charotar Gas, which serves 10,000 domestic, 100 industrial and 250 commercial
customers through its 100-km-long pipeline, would be initially supplying 10,000
scmd of gas to Amul, later increasing it to 25,000 scmd.
vi. The cooperative body has an annual turnover of Rs 30 crore.
vii. The first CNG filling station will be at Chikodhara, on the National Highway 8,
between Ahmedabad and Vadodara.
viii. Two more CNG stations are being planned for Borsad and Khambhat towns,
he said.
ix. Charotar Gas is the only entity registered under the Cooperative Act to be permitted
by the Petroleum and Natural Gas Regulatory Board (PNGRB) to bid for CGS
business.
x. Charotar Gas Sahkari Mandali Ltd., India’s only city gas distributer (CGD), will
be investing Rs13 crore before Vibrant Gujarat 2011, said A J Parmar, Managing
Director to EPC World
Gas Pipeline Infrastructure of Gujarat:
Gujarat currently has the most developed pipeline network in the country and is the only
state in the country where the gas pipeline network is being operated by more than one
player viz. GAIL (India) Limited (GAIL), Gujarat State Petronet Limited (GSPL) and
Gujarat Gas Company Limited (GGCL).
GAIL primarily serves consumers who have been allocated natural gas by MoP&NG and
its pipeline network can be divided into three sections:
i. South Gujarat Network –GAIL obtains gas from the ONGC operated Gandhar tank
farm for its South Gujarat network. The network contains a gas processing complex at
Gandhar, five terminals and pipelines with sizes ranging from 4” to 26” with a
combined length of around 350 Kms. The network services around 40 consumers
between Surat and Vadodara region with a combined allocation of around 10.5
MMSCMD.

ii. North Gujarat Network – The network obtains gas from ONGC gas fields in the
North Gujarat region and serves customers in and around Ahmedabad. The network is
much smaller than the South Gujarat network and has a combined pipeline length of
175 Kms. The network supplies gas to around 30 consumers with a combined
allocation of 2.2 MMSCMD.
iii. Ex-Hazira – GAIL provides gas to some consumers in Hazira, directly from ONGC’s
GPC at Hazira, the landfall point for ONGC gas from the western offshore fields,
through dedicated spur lines. All these consumers are within 5 km distance from the
Hazira GPC and have a combined allocation of around 11 MMSCMD.
iv. GAIL has several customers connected on HVJ Pipeline, DVPL Pipeline and DUPL
Pipeline.
GSPL has been promoted as the nodal agency by the Government of Gujarat to set up gas
grid in Gujarat operating on common carriage basis. GSPL is going to set pipeline
network of around 3000 km in Gujarat. It currently operates 1550 KM and 350 KM under
construction/development pipeline network serving consumers in the Hazira, Vapi, Halol,
Bharuch, Vadodara, Ahmedabad, Morbi, Rajkot, Jamnagar, Mehsana, Himmatnagar &
Kutch regions. The pipeline obtains gas from the GSPC/NIKO owned onshore gas fields
in Hazira. The network also obtains gas from Cairn at Mora from its Suvali gas complex
through a 24”, 7 km pipeline, as well as Petronet LNG terminal and Hazira LNG
Terminal and domestic gas fields such as PMT and ONGC Olpad. GSPL pipeline
network is connected to East West Pipeline of RGTIL to transport gas from KG D6 field
in Andhra Pradesh to Gujarat at Attapardi (Vapi) and Bhadbhutt (Bharuch)
6.2 Charotar Gas - Porter’s Five Force Model:

Porter’s five forces model helps in accessing where the power lies in a business
situation. Porter’s Model is actually a business strategy tool that helps in analyzing the
attractiveness in an industry structure. It let you access current strength of your
competitive position and the strength of the position that you are planning to attain.
Porters Model is considered an important part of planning tool set. When you’re clear
about where the power lies, you can take advantage of your strengths and can improve the
weaknesses and can compete efficiently and effectively.
Porters model of competitive forces assumes that there are five competitive forces that
identifies the competitive power in a business situation. These five competitive forces
identified by the Michael Potential
Porter are:
Entrants
(Threat of
Mobility)
Suppliers Industry Buyers

(Supplier (Buyer
Power) Rivalry Power)
Substitutes
(Threats of
Summer Internship Report Substitutes)
GHPIBM (Batch 2009-11) Page 45
1. Threat of substitute products
Threat of substitute products means how easily your customers can switch to your
competitors product.Threat of substitute is high when:
1. There are many substitute products available
2. Customer can easily find the product or service that you’re offering at the same or
less price
3. Quality of the competitors’ product is better
4. Substitute product is by a company earning high profits so can reduce prices to the
lowest level.
In case of Charotar Gas there is a high threat of substitute products as there are
many other substitutes of the natural gas like Kerosene (used by lower class families
due to cheap price), LPG-bottled cylinder, Biogas (mainly used in the farmhouses in
Gujarat), etc.
All the other substitutes can be found easily and have lower prices than PNG
except LPG.
2. Threat of new entrants

A new entry of a competitor into your market also weakens your power. Threat of new
entry depends upon entry and exit barriers. Threat of new entry is high when:
1. Capital requirements to start the business are less
2. Few economies of scale are in place
3. Customers can easily switch (low switching cost)
4. Your key technology is not hard to acquire or isn’t protected well
5. Your product is not differentiated
In case of Charotar Gas, in Vallabh Vidyanagar Market, there are entry exit
barriers up to some extent as according to the government regulations only few
players can supply natural gas in the confined area.
ONGC, as compared to Charotar Gas, has much more capital backup and a good
name. hence customers can easily switch to it or any other supplier possessing more
traits appears in the market.
3. Industry Rivalry
Industry rivalry mean the intensity of competition among the existing competitors in the
market. Intensity of rivalry depends on the number of competitors and their
capabilities. Industry rivalry is high when:
1. There are number of small or equal competitors and less when there’s a clear
market leader.

2. Customers have low switching costs
3. Industry is growing
4. Exit barriers are high and rivals stay and compete
5. Fixed cost are high resulting huge production and reduction in prices
These situations make the reasons for advertising wars, price wars, modifications,
ultimately costs increase and it is difficult to compete.
As far as Charotar Gas is concerned, it has very less competitors i.e. only LPG
suppliers and no in case of PNG suppliers as there are entry barriers in the market
up to some extent.
4. Bargaining power of suppliers

Bargaining Power of supplier means how strong is the position of a seller. How much
your supplier have control over increasing the Price of supplies. Suppliers are more
powerful when
1. Suppliers are concentrated and well organized
2. a few substitutes available to supplies
3. Their product is most effective or unique
4. Switching cost, from one suppliers to another, is high
5. You are not an important customer to Supplier
In Anand,Charotar Gas takes Gas from GAIL only hence there is shortage of suppliers.
5. Bargaining power of Buyers:

Bargaining Power of Buyers means, How much control the buyers have to drive down
your products price, Can they work together in ordering large volumes. Buyers have
more bargaining power when:
1. Few buyers chasing too many goods
2. Buyer purchases in bulk quantities
3. Product is not differentiated
4. Buyer’s cost of switching to a competitors’ product is low
5. Buyers are price sensitive
6. Credible Threat of integration
Here, in case of Charotar Gas it has near about 70,000 customers and in turn the
customers have only one supplier of Piped Natural Gas. Hence, buyers have less
bargaining power and moreover in the Gujarat state people have higher paying
capacity.

CHAPTER – VII
DATA ANALYSIS AND INTERPRETATION
1. Which one of the following are you using?

(a) PNG (b) LPG Cylinder
Chart of Fuel
60
56
50
40
40
Percent
30
20
10
4
0
1 2 3
Fuel
Coding:
1- PNG users
2- LPG Cylinders users
3- Using both
From the chart we can find out that the number of PNG users (56%) are
more than the LPG Cylinders (40%) users and only 4% of the respondents
use both PNG and CNG in the surveyed area.
2. What were you using prior to PNG (Piped Natural Gas)?
(a) LPG (b) Charcoal (c) Kerosene (d) Others (Plz Specify)

From the data collected we can find out that 100% of the respondents were using
LPG prior to the PNG.
3. Since how long you have been using Piped natural gas?
(a) 1-2 years (b) 3-4 years (c) 5-6 years
Chart of Years
40
40
36
30
Percent
20
20
10
0
1 2 3 4
Years
Coding:
1- 1-3 years
2- 3-5 years
3- 5-6 years
4- > 6 years
1) 40% of the people are using PNG since 1-3 years.
2) 36% of the respondents are using it since 5-6 years.
3) Only 20% and 4%are there who are using this gas since 5-6 years and
more than 6 years respectively.
4. If other supplier comes in the market (for PNG) then on what criteria would you like
to accept it? (Rate on a scale of 1-6)
(a) Low cost --------------------
(b) Minimum time for installation --------------------
(c) Good payment facilities --------------------
(d) Good or instant pressure --------------------
(e) Lower connection charges --------------------
(f) Others (Please specify) --------------------

Chart of low connection charges
30 28
25 24
20 20
20
Percent
15
10
8
0
2 4 6 8 10
low connection charges
Percent within all data.
1) 24% and 28% of the respondents have given more weight to the lower
connection charges as the acceptance criteria for PNG.
2) While 40% people gave average response to this criteria.
3) 8% are not bothered about the lower connection charges so gave it least
priority.
Chart of instant pressure

40
40
36
30
Percent
20
12
10 8
0
2 4 6 8 10
instant pressure
Percent within all data.
1) 49%, 36% and only 4% of the respondents are concerned about the
pressure of the PNG whike taking connection.
2) Other 12% were on the lower priority side while taking pressure of the
gas into consideration.

3) 8% of the people are least concerned about the pressure of the gas while
taking connection.
Chart of Payment facilities

80 76
70
60
50
Percent
40
30
20
12
10 8
4
0
2 4 6 8
Payment facilities
1) Majority (76%) of the respondents have given it least priority while taking
the PNG connections.
2) Only 8% of them have given it as their first priority.
3) Others constitute only 12% and 4% who gave average responses to it.
Chart of Min install time

50 48
40
30 28
Percent
20
12 12
10
0
2 4 6 8
Min install time
1) Only 12% People consider it as the main criteria whole taking the
connections.
2) Majority of them are not concerned about the installation timing and they
constitute about 48% of the respondents.

Chart of Low Cost
80
72
70
60
50
Percent
40
30
20
12 12
10
4
0
4 6 8 10
Low Cost
1) Majority (72%) of the respondents have considered Low Cost as the main
criteria for accepting any new gas in the market.
2) 12% are also in league with the other 72%.
3) 12% gave average responses.
4) Rest 4% are least concerned about the cost while accepting or trying the new
gas.
5. How do you find the pricing of the gas?

(a) Cheap (b) value for the money (c) costly
Pie Chart of Pricing

C ategory
1
3
1
20.0% 2
2
53.3%
3
26.7%
1) 53.3% of the respondents find the pricing of the Charotar gas appropriate
and value for the money. That is neither cheap nor costly.
2) 26.7% found the gas costly and the other 20% found it cheap.
6. How many times in a month do you face low pressure problems?

(a) 1-3 times (b) 4-7 times (c) >8 time (d) None

Pie Chart of press. Problems
C ategory
2 4
2.7%
1 1
10.8% 2
4
86.5%
1) 86.5% of the respondents did not find any problems related to pressure in the
Charotar Gas.
2) 10.8% and 2.7% faced pressure problems 1-3 times and 4-7 times
respectively in the Charotar Gas.
7. How is the payment system?
(a) Very good (b) Good (c) Average (d) Poor (e) Very poor
Pie Chart of Payment sytem

C ategory
3 2
6.4%
1
1
8.5% 3
2
85.1%
1) 85.1% of the respondents find the payment system of the Charotar Gas
satisfactory.
2) The other 8.5% and 6.4% found it very good and average respectively.

8. Are you satisfied with the metering system of the PNG?
(a) Definitely Yes (b) Yes (c) May be (d) No (e) Definitely no
Pie Chart of Metering

C ategory
1 3
4.0% 3
12.0% 2
1
2
84.0%
1) 84% of the respondents are satisfied with the metering system of the Charotar
gas while 12% showed neutral response.
2) Rest 4% were strongly satisfied with the same.
9. What problems do you face during the supply/connection of the LPG cylinder? (Rate
on a scale of 1-5)
(a) Malpractices are there (such as overcharging and bribing.)
(b) Right weight cylinder is not provided.
(c) No timely delivery.
(d) Not user friendly.
(e) Not safe.
Chart of Malpractices
30
28 28
25
20
20
Percent
16
15
10
8
0
2 4 6 8 10
Malpractices
1) Only 8% of the respondents have faced the problem of malpractices in the

supply and connection of LPG cylinders.
2) Other 28% have never faced such kind of problem.

Chart of Rt. Weight
50 48
40
30
Percent
20 20
20
10 8
0
2 4 6 8 10
Rt. Weight
4) 4% of the respondents have faced the problem of receiving incorrect

weight cylinders and have given it first priority..
5) Other 8% have given 2nd priority while third and fourth place have been
given by 20% each.
6) 48% people have never faced this problem.
Chart of No Timely Delivery

60
56
50
40
Percent
30 28
20
12
10
4
0
4 6 8 10
No Timely Delivery
1) 56% people have faced the problem with timely delivery of the cylinders
and have placed it at first place when it comes to the problem faced by
them.
2) 28% have put it as their 2nd priority.
3) Rest 12% and 4% may not have faced any problem of such kind.

Chart of Not User Friendly
35
32
30
25 24 24
20
Percent
15
12
10 8
0
2 4 6 8 10
Not User Friendly
4) 32% and 12% respondents think that LPG is not user friendly for them
and hence they have put it at 2nd and 1st place.
Chart of Not safe

25 24 24
20
20
16 16
15
Percent
10
0
2 4 6 8 10
Not safe
1) 20% and 16% people do not find it safe for use (as reason cited by them
was –more possibility of accidents.)
2) On the other hand 16% of the respondents feel it safe for use.
10. What problems do you face during the supply of cylinders by vendor?
(a) Late delivery (b) Odd timings
(c) comes when reminded (d) You Yourself have to get the Cylinder

Pie Chart of Supply by vendor
C ategory
1
4 2
16.0% 3
4
3 1
16.0% 48.0%
2
20.0%
1) 48% people had the problem of receiving the cylinders late after the due
date.
2) 16% people had to remind the vendor for the delivery of the cylinder and
16% people faced the problem of not getting the delivery even. They had
to get it by their own.
11. It is understood that GOI is planning to increase the price of Cylinder – in such
scenario would you prefer to pay for that increase or try for some alternative fuel?
(a) We will switch to PNG, if prices rise.
(b) We will stick to LPG only.
Chart of Switching
60
60
50
40
40
Percent
30
20
10
0
1 2
Switching
1) 60% of the respondents using LPG are ready to switch to PNG if price of
LPG rise.
2) While 40% of them will like to stick to the LPG even in case of price rise.

12. What are the reasons for your not switching to PNG?
(a) High connection charges
(b) Unaffordable prices
(c) Services are not satisfactory
(d) Infrastructure not good.
(e) Others -------------------(Please specify)
Pie Chart of Reasons

C ategory
1
2
5
5
32.0%
1
48.0%
2
20.0%
1) 48% of the respondents do not switch to PNG due to the High connection
charges.
2) 20% of them think that they could not afford it (mainly the connection
charges which were non refundable).
3) Rest 32% had their other reasons for not going for PNG (like safety
reasons, costly,etc.)
13. According to you what should be the expected range of the PNG prices (Current
prices are 25.6 Rs,/Kg)?
(a) 15-20 Rs./ Kg
(b) 20-25 Rs./ Kg
(c) 25-30 Rs./ Kg
(d) Whatever may be the prices we are not affected by it.

Chart of expected Price
90
80
80
70
60
Percent
50
40
30
20
8 8
10
4
0
1 2 3 4
expected Price
1) 80% of the respondents here expect the prices of the gas to be between 20-
25 Rs./ Kg.
2) 4% of them are not affected by the prices of the gas (as they replied).
14. Do you have any suggestion for the PNG suppliers in the market and how are your
expectations from the new supplier?
(a) Very high (b) High (c) Average (d) Low (e) Very low
Chart of Expectations from Supplier

50
44
40
36
30
Percent
20
10 8 8
0
1 2 3 4 5
Expectations from Supplier

1) 44% of the customers have average expectations from the new PNG gas supplier
in Vallabh Vidyanagar.
2) While 36% respondents have higher expectations and 8% people expect alot
from new supplier.
3) Only 4% and 8% respondents have low and very low expectations from the new
supplier.

CHAPTER – IX
Key Findings:
i. The increasing demand for PNG is due to the lower prices, good pressure efficiency.
People would accept the new player in the market only if it offers low connection
charges in addition to the above mentioned traits (which are high in case of Charotar
Gas).
ii. People find the pricing of the Charotar Gas satisfactory, value for the money and there
are no pressure problems also. They find the payment and metering system quite good
and seem satisfied with that too.
iii. While in case of LPG cylinder the customers were found to have problems regarding
the late delivery (main problem), moreover they did not find it user-friendly and safe
for children.
iv. 60% i.e. more than the half of LPG customers are ready to switch to PNG if LPG
prices rise in future. But 40% stated the problem of high connection charges who do
not want to switch to PNG.
v. Price and government regulations affect the demand for the Natural gas and it’s
inversely proportional to each other.
Recommendations:
1. Energy Diversifications: ONGC should take into account the alternative fuel part also
to meet the demand in future. Through research and technology alternative fuels can be
produced and harnessed.
2. The prices can be set at a lower level according to the customers’ expectations. This can
earn more customers and goodwill to the firm.
3. Awareness among People: the subject can be made more aware about the use of Natural
Gas as cleaner and greener fuel.
4. ONGC should capture the Northern and Eastern regions through JV’s and tie-ups.

Conclusion:
The demand for energy is growing at a very fast pace as compared to the production and
supply of the Natural gas. This is due to the growing economy, industrialization and more
awareness regarding use of Green fuel (CNG, PNG). In India the demand for natural gas is
mainly from the power and fertilizer sector with city gas distribution (CGD) and industrial
sector where the use of natural gas is maximum.
From the research done to study the perception and satisfaction level of customers of
Charotar gas. The people are paying high for Charotar gas and in turn they were not happy
with the pricing of that (mainly in restaurants).
India is left with a very small amount of energy resources which may deplete in the future
very soon. It is evident from the study that to meet the growing demand of the natural gas we
will have to import it from foreign countries.
The demand for the NGV’s is also increasing and to fulfill it the other alternative forms of the
fuels are considered. If ONGC does not enter this soon and grasp the available market the
other company will do so. Hence this is strongly recommended to the company to enter the
alternative fuel market as soon as possible.

ANNEXURE
QUESTIONNAIRE:
1. What were you using prior to PNG (Piped Natural Gas)?

(b) LPG (b) Charcoal (c) Kerosene (d) Others (Plz Specify)
2. Since how long you have been using Piped natural gas?
(b) 1-2 years (b) 3-4 years (c) 5-6 years
3. If other supplier comes in the market (for PNG) then on what criteria would you
accept it? (Rank on a scale of 1-5)
(g) Low cost --------------------
(h) Minimum time for installation --------------------
(i) Good payment facilities --------------------
(j) Good or instant pressure --------------------
(k) Lower connection charges --------------------
4. How do you find the pricing of the gas (What he was using prior to this)?
(b) Cheap (b) value for the money (c) costly
5. How many times in a month do you face low pressure/intermittent supply problems?
(b) 1-3 times (b) 4-7 times (c) >8 time (d) None
6. How is the payment system?

(a) Very good (b) Good (c) Average (d) Poor (e) Very poor
7. Are you satisfied with metering system of the Piped Natural Gas (PNG)?
(a) Definitely Yes (b) Yes (c) May be (d) No (e) Definitely No
8. What problems do you face during the supply/connection of the LPG cylinder? (Rank
on a scale of 1-5)
(f) Malpractices are there (such as overcharging and bribing.) --------------------
(g) Right weight cylinder is not provided. --------------------
(h) No timely delivery. --------------------
(i) Not user friendly. --------------------
(j) Not safe. --------------------
9. What problems do you face during the supply of cylinders by vendor?

(b) Late delivery (b) Odd timings (c) Comes when reminded
10. It is understood that GOI is planning to increase the price of Cylinder – in such
scenario would you prefer to pay for that increase or try for some alternative fuel?
(c) We will switch to PNG, if prices rise.
(d) We will stick to LPG only.
(e) We will find other alternative. (Please Specify) ------------------------------------------

11. What are the reasons for your not switching to PNG?
(f) High connection charges
(g) Unaffordable prices
(h) Services are not satisfactory
(i) Infrastructure is not good
(j) Other Reasons (Please specify) -------------------------------------------------------------
12. In your opinion what should be the price of gas which is affordable to you (current
price of LPG gas per Kg is Rs. 25.6)?
(a) 15 - 20 Rs/ Kg
(b) 20 - 25 Rs/ Kg
(c) 25 - 30 Rs/ Kg
13. Do you have any suggestion for the PNG suppliers in the market and how are your
expectations from the new supplier?
(a) Very high (b) High (c) Average (d) Low (e) Very low
Suggestions (if any) -----------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
14. Personal Details:

i. Name:
ii. Income Group (In Lakhs):
(a) Below 1 (b) 1-2 (c) 2-3 (d) 3-4 (e) Above
4
iii. Age (In Years):
(a) 1-15 (b) 16-30 (c) 31-45 (d) 46-60 (e) Above 60
iv. Address:

BIBLIOGRAPHY
1) www.google.com
2) www.gailonline.com
3) www.indiatimes.com
4) www.businessstandard.com
5) www.moneycontrol.com
6) Business Research Methods, 9th edition (Tata McGraw Hill); Cooper, Donald R;
Schindler, Pamela. S;
7) Marketing Research, 5th edition (Pearson and Prentice hall), Naresh K. Malhotra.

Chapter - I: 1.1 ONGC - History

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CHAPTER – I

1.1 ONGC - History:

2. To plan, promote, organize and implement programmes for the development of

Summer Internship Report GHPIBM (Batch 2009-11) Page 1

6. To undertake, assist, encourage or swap or promote the production of petroleum

9. To establish, provide, maintain and perform scientific, technical, engineering, project

Products Produced by ONGC (Table No.1)

Summer Internship Report GHPIBM (Batch 2009-11) Page 3

Diversifications - whether ONGC should enter this or not?

1.4 Strategies and Challenges

Corporate Strategic goal

Summer Internship Report GHPIBM (Batch 2009-11) Page 4

1.6 Objectives of the Study:

Summer Internship Report GHPIBM (Batch 2009-11) Page 6

1.7 Scope and limitations of the Project:

1. Chances of respondents’ error: The information provided by the respondents

Summer Internship Report GHPIBM (Batch 2009-11) Page 7

2.1 Type of Research Design

2.2 Population and Sampling

The target population for this study is better defined as

4. Sampling Size:25 respondents

2.3 Sources of Data

Summer Internship Report GHPIBM (Batch 2009-11) Page 8

The assumptions made during the study are:

i. The sample used represents the population.

2.5 Scaling Techniques used

There is use of Likert scale, Rank order scale in the questionnaire.

Summer Internship Report GHPIBM (Batch 2009-11) Page 9

GLOBAL AND NATIONAL MARKET SCENARIO OF CNG AND PNG

3.1 Global Energy Scenario (fig 2)

World Natural Gas Reserve by Geographic region as of

OIL & GAS PRODUCTION 2009 (fig. 3)

Egypt U.K Kazakhstan

Summer Internship Report GHPIBM (Batch 2009-11) Page 10

3.2 Indian Natural Gas Sector Analysis:

Summer Internship Report GHPIBM (Batch 2009-11) Page 11

India’s Energy mix (2008-2030)

Summer Internship Report GHPIBM (Batch 2009-11) Page 12

Production & Imports:

Natural Gas in billions of cubic feet. (Fig.6)

Summer Internship Report GHPIBM (Batch 2009-11) Page 13

Source: Directorate General of Hydrocarbons, Ministry of Petroleum & Natural Gas, BP

3.3 Product Description

Typical Composition of Natural Gas (Table 3)

Summer Internship Report GHPIBM (Batch 2009-11) Page 14

Natural Gas Processing

Summer Internship Report GHPIBM (Batch 2009-11) Page 15

Source: ONGC (website fig.8)

Natural Gas - Uses

Natural gas is a major source of electricity generation through the use of gas

Summer Internship Report GHPIBM (Batch 2009-11) Page 16

Summer Internship Report GHPIBM (Batch 2009-11) Page 17

Blue diamond symbol used on CNG-powered vehicles

Compressed Natural Gas (CNG) is a fossil fuel substitute for gasoline (petrol), diesel,

CNG is made by compressing natural gas (which is mainly composed of methane [CH4]),

Summer Internship Report GHPIBM (Batch 2009-11) Page 18

CNG is the least polluting (Table 4)

What are NGV’s?

Summer Internship Report GHPIBM (Batch 2009-11) Page 19

“Growth Opportunities in Global Automotive Composite CNG Tank Market 2010-2015”

Global CNG Scenario

South East Asia