International Journal of Chemical Engineering and Applications, Vol. 4, No.

1, February 2013

Natural Gas Business and Market in India

Subrat Sahu and Varun Singh

Abstract—Due to recent change in policy and establishment

A. Domestic Applications
of regulatory board along with advancement in technology and 1) Cooking
emergence of innovative practice has paved the way for
standardization in Natural Gas business. The potential has been Use of Natural Gas has not only given comfort to
recognized by many companies for developing their business housewives, hotels, hospitals, and restaurants etc. but also
and market particularly in India. Attempts have been made to contributes to a greater extent saving the environment, these
discuss the business and market implications of technology, appliances are available for single stove to commercial size
innovative practices and development which result in outcome cooking ranges[2].
of shaping of natural gas business in India.
2) Space heating/ gas heat pump (GHP)
Index Terms—CNG market, domestic applications, The small size gas driven Gas Heat pump (GHP) are
industrial & commercial applications, PNG market. gaining ground and becoming more efficient around the
world, as they offer significant amount of energy efficiency
and carry additional environmental benefits. The Natural Gas
I. INTRODUCTION is burned in special burners which heat the coils. The blower
from behind throws the air in these coils. This, in turn,
India’s gas consumption increased from 78.23 MMSCMD
provides hot air for the house, office or other buildings.
in 2003-04 to 161.51 MMSCMD in 2011-12 and recorded a Depending on the size of the space to be warmed, the size of
CAGR of 8.39%. Power sector has been the largest consumer the space heater can be selected. The gas fired space heater
of natural gas accounting for 33% consumption followed by are also suitable for outdoor insulation like clubs, banquets
fertilizer sector accounting for 28% [1]. Table-1 below shows lawn etc. [3].
the growth rate in Natural gas consumption in India in last 3) Geyser/ hot water supply
decade. As in normal electric geysers, here the water is stored in
the insulated vessel. The burner at the bottom space lit as
TABLE I: NATURAL GAS CONSUMPTION IN INDIA soon as the water starts circulating in the geyser. That is, the
ignition starts automatically when water tap to/from geyser is
open. The water storage and the heating system are contained
in two different annulus. The inner one contains the burner
system and the outer one the water storage. Tankless gas
heaters can produce 6 liters of hot water every minute. Unlike
storage water heaters, these heaters heat running water
flowing through a thin duct wrapped around a combustion
chamber which is fuelled by natural gas.
The instant type water heaters are also available based on
gas firing. The geysers are mounted on wall similar to electric
geyser. There is no requirement of electricity since the
II. PNG AND CNG MARKET ignition is through battery.
The availability of piped natural gas to many households 4) CNG dispensing at residence
leads to several value added applications. It also started CNG Dispensing at home is another area which provides
catering to multiple industries. Use of PNG is now not hassle free refueling of cars or other transport vehicles of an
limited for cooking application but widen the area of individual. The extension of PNG is connected to a machine
applications. New applications of PNG, a one stop solution called fuel maker which has a compressor capable of
for entire domestic need with a concept of ‘One Switch compressing small volumes from milli bars pressure to 230
Solution’ may be adopted in the household in near future in bar. The vehicle is connected through a mass flow meter. The
India. fuel maker can fill a car over night. A safety connector is also
provided between the vehicle and fuel maker. In the event the
vehicle is tried to be driven off without disconnecting the fuel
Manuscript received January 11, 2013; revised February 28, 2013. maker from the vehicle re-filling point, the connection will
Subrat Sahu is an Associate Professor, School of Petroleum Management,
Pandit Deendayal Petroleum University, Gujarat, India (e-mail: get disconnected with small pull from the vehicle.
[email protected]). The feature of fuel maker is similar to CNG dispenser
Varun Singh is a Final Year MBA Student, School of Petroleum
Management, Pandit Deendayal Petroleum University, Gujarat, India (e-mail: except that it also houses a compressor; its size is similar to
[email protected]). commercially available select branded washing machine [4].

DOI: 10.7763/IJCEA.2013.V4.256 35
 International Journal of Chemical Engineering and Applications, Vol. 4, No. 1, February 2013

5) Power generation using micro turbine (almost 25% of the alternative compression refrigerant
A small gas turbine can be used by a house owner to make system). The most economical is 35 ton and above. The range
himself sufficient for his/her electric requirements. In fact, from 7.5 to 35 ton is also commercially economical and
there could be complete solution for all energy requirements payback period is higher than that of above 35 ton [7].
of the house whether cooking, space heating, geyser, fuelling, C. CNG Applications
air conditioning etc.[4].
The CNG Infrastructure Development is a slow process,
B. Industrial & Commercial Applications where co-ordination takes considerable time and efforts. The
development of the infrastructure takes precedence over the
1) Yarn heat setting
CNG vehicle conversion once certain amount of
The Yarn Setting process is the process in textile industry infrastructure is developed. A few recent developments in
that take place between yarn twisting & cloth weaving. The CNG markets as evidences are highlighted below:
polyester yarn (POY) purchased from bulk producers like
1) CNG application in transportation
Reliance, JCT etc. needs to be twisted before the cloth is
weaved. This requires controlled and uniform heating Auto, Buses and Cars have already started converting to
application. Natural gas gives them good quality [5]. CNG in spite of switching cost. There has been significant
development of CNG markets in many cities such as Mumbai,
2) Prime mover
Surat, Ahmadabad and Delhi in India [8].
Compressed air is regarded as utility in plant. At present,
2) CNG application in Indian railways
the compressed air is produced by using conventional air
compressor system driven by electric motors. However, gas Indian Railway requires cleaner and cheaper solution to
engine driven air compressor is more economical and adapt developing surroundings. Railway is conducting few
effective. The function is similar to electric motor of pilot projects on CNG applications in India.
providing shaft work for process applications. Shaft work 3) CNG in marine applications
includes turning a shaft to operate a compressor. Commercial cargo vessel handling was conventionally
3) COGEN handled by diesel driven engine. Gas as a best suitable
Combined Heat and Power (CHP) or Cogeneration is the replacement in the form of CNG may soon commercially be
simultaneous generation of usable heat and electricity in a available for this market.
single process. It uses exhaust heat from conventional power
generation to produce thermal energy. This heat energy with
help of equipment can be converted into more usable forms III. CONCLUSION
such as steam, chilled water or hot water that can be utilized A paradigm shift is being observed in Natural Gas market
in the process requirement by industrial facilities, replacing around 10% in next 15 years. The emerging
commercial establishment etc. The gas based CHP applications of Natural Gas are the evidences for the
technology is robust and the Gensets are designed to operate acceptance of this fuel in Indian market [9]. Fig. 1. represents
continuously for a minimum of 8000 to 8300 hours per the same.
annum [6].
4) Gas fired genset
Unlike Generator sets which use Diesel for electricity
generation. Gas Gensets use Natural Gas for power
generation. Recent developments in retrofitter technology
has now made it possible to run diesel engines on Bi fuel
setup where a mix of Diesel and Natural Gas is injected into
engines for running them. Ranges availability in market are
from 2.5 to 15 KVA for domestic and commercial use.
5) Genset for weaving
The State of Gujarat in India has a long tradition of textiles
and account for almost 35% of woven fabrics. In order to
provide economical and reliable power solutions to weaving
industry, Gujarat Gas has taken initiative to develop gas
based generator sets in the range of 40 KVA to 125 KVA.
6) Gases fired air conditioner/ vapor adsorption
mechanism (VAM)/vapour adsorption chillers (VAC)/
vapour adsorption refrigerant (VAR)
The gas based Air Conditioner works on the principle of
vapour absorption refrigeration (VAR). It works by
vaporizing refrigerant (normally Ammonia) at very low
pressures by the heat provided by burning of gas. These
vapours are then expended which in turn provides the cooling
effect. The vapours are then getting absorbed in a solution.
The circle gets completed when the refrigerant in liquid form
is received. This system of refrigerant is very cost effective Fig. 1. Shift expected in natural gas sector

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 International Journal of Chemical Engineering and Applications, Vol. 4, No. 1, February 2013

Technology, Innovative Practices and Development are [4] A. K. P. Diwan, Handbook of Natural Gas Technology and Business,
pp. 243-247, September 2012
responsible for such improvement in demand in the Natural [5] Gujarat Gas Co. Ltd. New Business Application. [Online]. Available:
Gas business and market. http://www.gujaratgas.com/gujaratgas/website/content.aspx?pageid=1
76&parentid=126&pagelevel=2
[6] W. C. S. Doty, in Energy Management Handbook, United State of
America, The Fairmont Press, Inc. Retrieved August 30, pp. 153-177
IV. FUTURE OUTLOOK 2012
Natural gas demand is expected to grow at 8.8% CAGR [7] Mahanagar Gas Ltd. [Online]. Available:
http://www.mahanagargas.com/Content.aspx?Mkey=MzU=&lKey=M
from 189 MMSCMD in 2010-11 to 311.6 MMSCMD in w==
2014-15 and 473 MMSCMD in 2016-17[10]. Demand is [8] Indraprastha Gas Limited. [Online]. Available:
likely to increase due to the expected commissioning of http://www.iglonline.net/CNGFAQ.aspx
[9] Central Statistics Office, National Statistical Organisation. New
certain power projects, re-opening of some closed fertilizer Delhi: Ministry of Statistics and Programme Implementation,
units and continued investments in CGD. However, despite Government of India, no. 19, pp. 46-47, August 30, 2012.
the significantly high potential across several sectors, the [10] City Gas Distribution, India Infrastructure Publishing Pvt. Ltd. New
Delhi, Indian Infrastructure Reasearch, pp. 20-21, 2012.
realizable demand for natural gas will be the function of [11] World Energy Council- Indian Member committee, Indian Gas Sector,
supplies in market, the price competitiveness of gas as In India Energy Book 2012, pp. 13-34, 2012
compared to alternative fuels, and timely commissioning of
the proposed transmission pipeline infrastructure.
Subrat Sahu holds a Ph.D in Business
Domestic gas supply is expected to grow at a best case Administration from Utkal University, Orissa and is
scenario of 10 % CAGR for the same period. The 1,680 km MBA from Berhampur University, Orissa with
Turkmenistan-Afghanistan-Pakistan-India pipeline, being ‘Marketing Management’ as specialization. He has
more than eighteen years of teaching, training,
led by Asian Development Bank, promises to bring in research and industry experience having varied
additional 38 MMSCMD gas into country by 2016. Until publications in both national and international
then demand supply gap has been well taken care by LNG journals and conferences.
His recent publications are in the areas of Customer
business [11]. Relationship Management, Strategic Management and Corporate Social
In a nutshell, the outlook for Indian natural gas sector is Responsibility. Dr. Sahu undertakes research in Consumer Behaviour, CRM,
very robust and mostly driven by a strong domestic demand. Business-to-Business Marketing, Services Marketing, Strategic
Management and Corporate Social Responsibility.
However, policy issues related to marketing freedom of
private gas producers and long-term pricing policies need Varun Kumar Singh holds B.E (Instrumentation &
urgent attention of the Indian Government. Control) from Gujarat University and pursuing MBA
(Energy & Infrastructure) from School of Petroleum
Management, PDPU in Gandhinagar, Gujarat, India.
REFERENCES He has work experience of 15 month prior joining
[1] The Energy and Resources Institute, Oil and Gas, in Teri Energy Data MBA in City Gas Distribution Company (GSPC
Directory & Yearbook New Delhi: The Energy and Resources Institute Gas). Mr. Singh holds interest to undertake research
(TERI), pp. 111-117, 2012 in field of Customer Relationship Management and
[2] Adani Gas Limited. [Online]. Available: Business Development for City Gas Distribution.
http://www.adanigas.com/faqs/connfaq.php
[3] Institute of Gas Technology, Uses of Natural Gas, Natural Gas in
Non-Technical Language, United States of America: Penn Well
Corporation, 2012

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