242266287 case-study-on-guil

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Acknowledgement
It gives me great pleasure on bringing out the project report entitled, “Marketing
strategy of GAIL (India) Ltd. for its products and identifying areas of
improvement”.
I wish to express my sincere thanks to Mr. Partha Jana, DGM,GAIL for his
valuable suggestions and unflinching support. He picked interest in me to handle the
project and encouraged my work every time. It would have been difficult for me to
complete the project without his expert and experienced views.
I also wish to express my sincere gratitude to Mr. P. Ramkrishna,
Sr.Manager(Mktg.) and the whole Marketing Department for their thorough
support and co-operation throughout my training period. Their invaluable knowledge
and advice guided me towards the completion of the project.

Finally, I would like to thank all my friends and associates whose suggestions
and criticism made a scope for the betterment of this report.
Jitendra Kumar
PGDBA
Registration No. 201211577
SCDL

Synopsis
GAIL (India) Limited is Navaratna PSU under the administrative control of Ministry of
Petroleum and Natural Gas. It is primarily engaged in to Natural Gas marketing and
transmission activities. The company operates and maintains about 8,000 kilometers of Gas
Transmission pipelines in the western, southern, and eastern regions of India. GAIL (India)
Limited also offers various petrochemical products and services, which primarily include
films, injection molding, master batch, rote molding, and extrusion coating; and produces
liquefied petroleum gas and allied products, such as propane and pentane. In addition, it
offers telecommunications products and services; supplies naphtha tankers; and engages in
retail gas business that includes Piped Natural Gas distribution, as well as Compressed
Natural Gas (CNG) distribution to transport sector.
Approach and Methodology
• The analysis is based on the study of the existing marketing practice at
GAIL.
• Collection of primary data/information regarding the marketing strategy in the form
of interviews.
• Collection of secondary data from reliable internet sites for competitor survey and
latest trends in gas marketing.
• Reaching out to GAIL’s branch offices like GPTC, GTI to collect data about
GAIL’s current trends.
• The current market trend was compared to the historical data and then the
recommendations were given.
• Studying relevant official GAIL documents to understand the
organizational functioning.

Analysis of GAIL
GAIL has ambitions to be a highly efficient integrated gas company, with interests
from field development and production, through national transmission and imports, to
distribution and allied industries such as petrochemicals. These ambitions are not
limited to India, as GAIL is building a portfolio of international upstream and
downstream gas assets. It dominates domestic infrastructure and gas purchasing from
domestic suppliers. With huge potential for growth in Indian gas demand, GAIL
should be able to deliver sustained long-term revenues and earnings appreciation.
EXECUTIVE SUMMARY
GAIL (India) Limited, a Navartna Company is a central PSU under the administrative
control of Ministry of Petroleum and Natural Gas, which was incorporated in 1984 for
transportation of Natural Gas as core business. As on date, GAIL is operating 8000 Kms
of Gas Pipelines across India and has a market share of 85% in India. GAIL expanded its
business to LPG, Petrochemicals, Telecom, City Gas Distribution, Power and
Exploration of Oil& Gas. Turnover to the company for the year 2010-11is Rs.32,459
Crores.
In India there is demand of about 280 MMSCMD of Natural Gas and supply is about 190
MMSCD and there is demand supply gap of about 90 MMSCMD. Therefore there is lot of
scope in the growth of Natural Gas transportation business. Having a strong distribution
network or in GAIL’s case, a comprehensive pipeline network forms a vital part of its
marketing strategy.
Type of business GAIL is in and the dynamic and forward approach of GAIL management
& working culture embedded into majority of various working level officers would
instill confidence in any stakeholders mind that GAIL will proactively modify
course/approach to excel in the upcoming competitive scenario in India.

TABLE OF CONTENTS
Chapter Title Page No.
1 Introduction 3
2 Review of Literature 8
3 Study on GAIL
3.1. Company Analysis 14
3.2. Indian Natural Gas Sector – development & outlook 17
3.3. Global gas market overview 18
3.4. Energy market overview-India 19
3.5. Competitive Landscape 20
3.6. Natural gas demand 26
3.7. Natural gas marketing 27
3.8. Contracts 28
3.9. Gas pricing in India 35
3.10.Gas demand supply projection 52
3.11.GAIL’s pipeline network 59
3.12.Petrochemical marketing 62
3.13.City gas distribution 85
4 Results & Discussion 92
5 Conclusion & Scope of further work 96
6 Recommendations for improvement 99
7 References 101
8 Annexures
Annexure 1 : Gas transportation tariffs in India 102
Annexure 2 : Gas Management System 108
Annexure 3 : Key conversion factors 111
Annexure 4 : List of abbreviations used 119

Chapter-1
Introduction
Company Snapshot
GAIL (India) Limited operates as a gas transmission and marketing company in
India. It primarily engages in natural gas marketing and transmission activities. The
company operates and maintains approximately
8000 kilometers of regional pipelines in the western, southern, and eastern regions of
India. GAIL (India) also offers various petrochemical products and services, which
primarily include films, injection molding, master batch, rote molding, and extrusion
coating; and produces liquefied petroleum gas and allied products, such as propane
and pentane. In addition, it offers telecommunications products and services;
supplies naphtha tankers; and engages in retail gas business that includes piped
natural gas distribution, as well as compressed natural gas fuel for transportation
purposes.
Further, the company, through its joint venture, Gujarat State Energy Generation, Ltd.,
produces power utilizing natural gas. Additionally, GAIL (India) engages in
exploration and production activities. It holds participation interests in 12
exploration blocks, including 2 NELP-I blocks,
6 NELP-II blocks, 2 NELP-IV blocks, and 2 Farm-in Blocks. These blocks span from
on land to deep offshore in West Coast and East Coast of India. It also involves in
liquefied natural gas import and re gasification, transportation of re gasified
liquefied natural gas (RLNG), and marketing of RLNG.
GAIL (India) has joint venture agreements with Bharat Petroleum
Corporation Limited; Government of Delhi; British Gas Plc; Indian Oil Corporation
Limited; Hindustan Petroleum Corporation, Ltd.; Government of Maharashtra;
and Oil and Natural Gas Corporation Limited.
The company was formed in 1984 under the name Gas Authority of India
Limited and changed its name to GAIL (India) Limited in 2002.
Vision, Mission and Objectives of GAIL
Corporate Vision
“Be the leading company in the natural gas and beyond with global focus, committed
to customer care, value creation for all stake holders and environmental
responsibility.”

Corporate Mission
To accelerate and optimize the effective and economic use of Natural Gas and its
infrastructure to the benefit of national economy.
Corporate Objectives
The primary corporate objectives of the company are:
• To focus on all aspects of the gas value chain including exploration,
production, transmission, extraction, processing, distribution of natural
gas and their related processes, products and leveraged services.
• To achieve all round excellence in endeavor towards services for the nature
and the people – The Ultimate Customer.
• To relentlessly strive to exceed the expectations of the customers, both
internal and external, and stakeholders by endeavoring to create superior value
through the use of best-in-class standards of operations, technologies and
practices related to safety, health and environment.
• To use technology stretched to its limit.
• To-e-enable all aspects of business as far as possible.
Gas Marketing
GAIL sells around 51 % (excluding internal usage) of Natural Gas sold in the
country. Of this, 37% is to the power sector and 26% to the fertilizer sector.
GAIL's vast operations and projects include:
• 8000 kms of Natural Gas high-pressure trunk pipelines. Adding another
about 5000 Kms of Natural Gas Pipelines in next 4 years, some are under
implementation.
• Trunk Pipelines with the capacity to carry 155 MMSCMD of Natural
Gas across India. Adding another capacity of 130 MMSCMD in next 4 years.
• Supplying nearly 70 million cubic meters of Natural Gas per day as fuel to
power plants for generation of about 5200 MW of power, as feedstock for gas-
based fertilizer plants to produce about 11 MMTPA of urea and to over 500
other small, medium and large industrial units to meet their energy and process
requirements.
• GAIL’s 2,800 km long Hazira-Vijaipur-Jagadishpur (HVJ) pipeline and 610
km Dahej-Vijaipur pipeline (DVPL), between them, cater to all the gas based
power plants, fertilizer plants, and industries along the entire West-North
corridor of India.

They also provide access to their pipelines, to third parties, for the transmission of
Natural Gas. Currently GAIL transports about 8 MMSCMD of Natural Gas on behalf
of various shippers.
City Gas Distribution
GAIL was the first company in India to pioneer City Gas Distribution project. In
addition to marketing Natural Gas through Trunk and Regional Transmission systems,
GAIL has formed joint venture companies to supply gas to households, commercial
users and the transport sector. Within the short span of 10 years, GAIL has
expanded its CNG business from one company (Mahanagar Gas Ltd.) in India to eight
companies in India and four companies abroad.
Gas supplied by GAIL to retail gas distributors serves more than 7.0 Lakhs
automobiles as Compressed Natural Gas (CNG) and over 7.50 Lakhs households as
Piped Natural Gas (PNG) in the cities of New Delhi, Mumbai, Vadodara, Vijayawada,
Hyderabad, Kanpur, Agra, Lucknow, Pune, Kota, Sonepat, Indore, Bareilly. GAIL's
City Gas Distribution initiatives are not confined to India. It has established its
presence in the CNG and City Gas arenas in Egypt through equity participation in
Fayum Gas, Shell CNG and Natgas; and has acquired a stake in China Gas Holding to
pursue CNG opportunities in mainland China. GAIL plans to develop City Gas markets
worldwide in collaboration with global oil and gas majors.
Petrochemicals
For GAIL, petrochemicals were part of its master plan for vertical integration
and utilization of every fraction of natural gas - GAIL uses natural gas as the
feedstock for the manufacture of HDPE/LLDPE. Instead of setting up its plant in
western India (Maharashtra and Gujarat) as was traditionally the case, they opted to
base it in northern India, looking at the large consumer base and demand for plastics.
In doing so, they were able to provide impetus to the regional petrochemical
downstream units to expand their production capacity in view of the proximity of
source of raw material.
In view of difficulties being faced by consumers in changing scenario of market
liberalization and opening up of economy to global competitions, GAIL has decided to
revise and modify in terms of gas supply agreements.
However, in the recent past it was further experienced that with the growing market
globalization and competition, further corrective and relief measures required to be
extended to other terms and conditions, as the current policy and terms/conditions in
the gas supply contract being somewhat one sided is not able to address problems to
the actual position of gas supplies and market conditions.
Presently GAIL is the major player in natural gas supplies. However there are other
players who have come into the market of natural gas supplies. It would not be long
that these players streamlines their contractual terms and conditions which consumers
may feel to be more attractive. Due to years old policy being followed by different
functional groups as an inflexible set of rules to handle the grievances of the

customers, GAIL’s image is at stake.

Therefore GAIL needs to address the changing scenario in more pro-active manner
and at same, address long pending customer grievances. This is how GAIL can endure
competition.
Approach and Methodology
• The analysis is based on the study of the existing marketing practice at
GAIL.
• Collection of primary data/information regarding the marketing strategy
in the form of interviews.
• Collection of secondary data from reliable internet sites for competitor survey
and latest trends in gas marketing.
• Reaching out to GAIL’s branch offices like GPTC, GTI to collect data about
GAIL’s current trends.
• The current market trends was compared to the historical data and then the
recommendations were given.
• Studying relevant official GAIL documents to understand the
organizational functioning.

Chapter-2
Review of Literature
From the “Memorandum of Understanding” between MoP&NG and
GAIL (India) Ltd 08-09, it was found out that:
The maximum realistic Natural Gas Marketing projections have been derived
based on domestic gas / RLNG availability trends during the year
2008-09 & 2009-10 (anticipated). These are as follows:-
Excellent Very Good Good Fair Poor
TOTAL(Marketing) 87.00 83.47 79.42 75.37 71.32
TOTAL(Transmission) 114.81 110.74 105.34 99.94 94.54
The targets for natural gas will be subject to correction depending upon the actual
quantity and quality of Natural Gas received from ONGC / OIL / JV / Petronet LNG
Limited/Spot LNG.
GAIL's Customer Satisfaction Index
Customer satisfaction Index aims to translate the customers feedback to improve
operational performance, product and service quality. For the purpose of
calculating CSI, GAIL's activities have been divided into following five business
segments: (i) Natural Gas, (ii) Petrochemicals, (iii) Liquid Hydrocarbons, (iv) LPG
Transmission, (v) GAILTEL
CSI Feedback form has been developed for each business segments product- wise.
Feedback form is in the form of questionnaires and is released through quarterly
campaigns. Customers fill in the feedback form online through internet access.
Average Quarterly CSI of each Business area mentioned is calculated across GAIL.
Weighted average is then calculated based on the percentage contribution of each
Business area to GAIL's overall turnover. This Weighted Average is reported
quarterly as GAIL's over all CSI.
InthereviewreportofNovember2003byTCS,thebackgroundsofGAIL’s activities were
provided as follows:
Gas Authority of India Limited (GAIL), one of India's leading Public Sector
Enterprises, is the largest gas transmission and marketing company in the Country.
The activities of the company range from gas marketing and distribution through trunk
and regional systems, to retailing of natural gas to gas processing for production and
marketing of LPG, Liquid Hydrocarbons and Petrochemicals.

Today GAIL owns and operates over 8000 km of pipeline and has about 85%
market share in the natural gas business in India. Also, more than half of the total
Urea production in India is gas-based, out of which GAIL contributes more than
90%, thus making a significant contribution to India's agriculture sector.
GAIL is one of the largest LPG producers in India, with a liquid hydrocarbon
production (including LPG) exceeding 1 million tones per annum, and it operates the
country's largest Gas-based LPG extraction plant. GAIL has now introduced the
concept of LPG pipelines in India, and is currently operating the world's longest -
1,250 km - exclusive LPG pipeline from Gujarat in western India to Loni near New
Delhi in North India. The project cost is Rs 12.5 billion.
GAIL also possesses a vast telecommunication network, which contributes
significantly to the high level of system reliability of operations, on-line real time
communication and monitoring higher productivity. GAIL project offices have
been set up at the places where the plants, complexes etc. are located.
For the past five years the company has been winning the 'Excellent Performance
Award' from the Indian Government. GAIL has its Headquarters at New Delhi
and the various branch and project offices are located all over India.
GAIL is diversifying in new business areas like wind and solar power and actively
scouting for opportunities in gas based power generation projects. GAIL successfully
commissioned a wind energy power project of 4.5 MW capacity in Kutch District of
Gujarat for captive consumption at Company’s installations at Gandhar, Samakhiali
and Kandla in Gujarat. GAIL is planning to set up over 115 MW of wind based
renewable power projects at investment of nearly Rs 700 crore in various states.
New Business Initiatives
GAIL has been reorienting its business approaches and strategies in view of the
emerging competition and entry of formidable national and international players.
GAIL, therefore, is primarily focusing on three major aspects as its short/medium term
strategy:
• Sourcing of gas.
• Expansion of existing markets and development of new markets
• Expansion of existing pipeline infrastructure as well as
development of new pipeline facilities
• Wind power projects

Operational Excellence
Operations and Maintenance of plant and equipment plays a pivotal role in the
growth and development of an industry. In the Gas Industry where millions of cubic
meters of gas per day are transported through cross-country pipelines, Operations and
Maintenance (O&M) assume significant importance. O&M of pipelines and plants
helps ensure a highly reliable and operationally safe system, providing not only un-
interrupted supply of gas to consumers, but also maximizing the throughput.
GAIL's emphasis is not only on maximizing production and sale of natural gas but
also to achieve this with least consumption of energy. Every effort is centered on
energy-efficient operation of the plants, machinery and processes.
The O&M arm of GAIL is constantly making efforts to improve upon its performance
in this area. Availability of the best-dedicated telecommunication/SCADA facilities in
the country has been fully utilized for on-line monitoring of machine/process
parameters along the pipeline. Observe, Detect, Analyze, Compare and Improve are the
watchwords for operations on day-to-day basis.
Reviewing the Infraline journal: Natural gas in India 2007, it was found
that GAIL is about to lay five new Natural Gas pipelines, they are:
1. Dadri-Bawana-Nangal.
2. Chainsa-Gurgaon-Jhajjhar
3. Jagdishpur-Haldia
4. Dabhol-Bangalore
5. Kochi-Kootanad-Bangalore/Mangalore.
Implementation/Construction activities have begun in above mentioned
pipelines in phases except Jagdishpur-Haldia Pipeline.

Chapter-3
Study on GAIL
3.1. Company Analysis
GAIL has ambitions to be a highly efficient integrated gas company, with interests from
field development and production, through national transmission and imports, to
distribution and allied industries such as petrochemicals. These ambitions are not
limited to India, as GAIL is building a portfolio of international upstream and
downstream gas assets. It dominates domestic infrastructure and gas purchasing from
domestic suppliers. With huge potential for growth in Indian gas demand, GAIL
should be able to deliver sustained long-term revenues and earnings appreciation.
SWOT Analysis
• Strengths:
1. Controls gas transmission infrastructure;
2. Dominates gas processing;
3. Major petrochemicals involvement;
4. Growing international portfolio;
5. Share of LNG import projects.
• Weaknesses:
1. Limited financial or operational freedom;
2. Cost and efficiency disadvantages;
3. Lack of upstream gas exposure.
• Opportunities:
1. Potential for efficiency gains;
2. Transmission system upgrading/expansion;
3. Petrochemicals capacity expansion;
4. Strong domestic energy demand growth.

• Threats:
1. Rising investment requirement;
2. Changes in national energy policy.
Market Position
State-run GAIL is responsible for the operation of India's largest gas transmission
network (at 8,000km) and a 1,269km LPG pipeline. The firm is also one of India's most
active foreign investors. GAIL owns and operates seven gas processing facilities with
an aggregate production capacity of
1.3mn TPA of LPG, Propane, Pentane and Sodium Benzene Phosphate (SBP).
GAIL operates the country's largest gas-fired petrochemicals complex, with an
installed Polyethylene (PE) capacity of 410,000 TPA. GAIL is setting up another Petro
Chemical Complex through subsidiary in Assam with an installed capacity of
280,000 TPA. The firm holds stakes in Compressed Natural Gas (CNG) projects in
Mumbai, Delhi, Kanpur, Pune, Bareilly, Lucknow, Agra, Ujjain, Dewas, Kota and
Andhra Pradesh as well as two projects in Egypt and one project in China. GAIL is a
partner in a 156 MW gas-fired power plant operated by the Gujarat State Energy
Generation Ltd, as well as the Petronet LNG consortium that will deliver LNG to the
Indian market. Over the past few years, GAIL has diversified into the domestic
E&P sector, holding stakes in 11 blocks in India and one in Myanmar.
Strategy
In a recent interview with a news agency, GAIL stated that it planned to invest
INR5bn during the next five years to purchase equity stakes in foreign gas companies
and overseas exploration work. The Indian firm is interested in picking up an equity
stake in Egypt's Nile Valley Corporation and exploration concessions in Brazil, the
Philippines and Myanmar. GAIL is also exploring the viability of a subsea gas
pipeline link between an offshore gas field in Myanmar to India.
Latest Developments
July 2007 saw GAIL declare its interest in buying an equity stake in the US$10bn Trans-
Saharan pipeline. The planned 4,300km gas pipeline, which will run from Nigeria
through Niger and Algeria, will have a capacity of 20-
30 bcm and is scheduled to come on stream in 2015. GAIL's representatives have
already met officials from Nigeria and Algeria in Brussels to discuss involvement in the
project. GAIL has also signed a deal with ONGC to pool resources to maximize output,
transportation and marketing of gas.
GAIL was due to ink a deal with Shell to gain access to Shell's Hazira LNG terminal for
import purposes on a toll basis. The two firms plan to build a US$10mn pipeline that
will connect the terminal to GAIL's Dahej-Uran pipeline, thereby rendering Hazira a
part of GAIL's nationwide gas grid, the largest transmission network in the country.

Both sides stand to benefit from the proposed project, with India having facilitated
access to gas imports and Shell gaining access to GAIL's domestic gas clients,
especially those in the northern markets.
3.2. India Natural Gas Sector : Development and Outlook
• Deregulation of domestic gas prices has been gradually gathering
momentum with the GoI, after a delay of nearly five years, effecting an
increase in prices in July 2005 for core sector consumers and deregulating
prices for other consumers. R-LNG has also been successfully marketed by
the offtakers, and private/JV producers have been able to revise prices upwards.
Because of these developments, nearly 50% of the market today is buying gas at
market determined rates—a significant change when compared with the scenario
in the recent past.
• The price of R-LNG supplied by PLL, the main supplier in the Indian markets
at present, is also expected to undergo a significant change beginning January
2009, when the currently existing cap is lifted and prices get gradually aligned
with the JCC prices. The incremental LNG to be sourced in the Indian market is
also expected to be available at higher prices than contracted hitherto, given the
tight demand-supply levels for LNG current and envisaged in the global market.
• Regulatory policies governing the gas sector are with the appointment of the
regulator under the PNGRB.
3.3. Global Gas Market Overview
• The world had 181.46 trillion cubic meters (tcm) of proven natural gas
reserves at end-2006, according to the BP Statistical Review of World Energy,
June 2007. Unlike oil, where 61% of global proven reserves are located in the
Middle East, there is a broader distribution of gas reserves across the globe, with
41% situated in the Middle East and 35% in Europe and Eurasia. The Asia
Pacific and Africa regions have 8% each of the remainder, with North America
and Latin America each holding 4%.
• Global gas consumption has grown by nearly 27% over 1996-2006,
compared with oil demand growth of 17% over the same period.
• Natural gas is used for several purposes and applications. The two principal
sources of demand are the industrial and residential sectors, which accounted for
35% and 33% of global gas consumption in 2005, according to the International
Energy Agency (IEA). Demand from the commercial and public services sectors
accounts for around 13%, 10% is used as feedstock for the petrochemicals
industry and around 6% is used in transportation.
• In addition, as investment in liquefied natural gas (LNG) increases and the global
LNG trade develops, the gas market may begin to look more like the oil market
over time.

• The worldwide trend observed over recent years of a shift from oil- to gas-
fired power stations, the growing use of gas in enhanced oil recovery (EOR)
processes and unconventional oil production, and global efforts to reduce gas
flaring will underpin rising demand.
3.4. Energy Market Overview: India
• India is the world's fifth-biggest energy consumer and continues to grow rapidly.
It is the third-biggest global coal producer, but has limited supplies of oil and
natural gas.
• Oil accounts for about 35% of India's total energy consumption, with its share
of the mix having risen from 30% earlier this decade. India's 5.69bn bbl of proven
oil reserves (BP Statistical Review of World Energy, June
2007) represent just 0.5% of the world's total, with Mumbai High being the
biggest producing field. The December Oil & Gas Journal survey reports
reserves lower at 5.62bn bbl. India's average oil production level (total liquids)
for 2006 was 807,000b/d.
• In terms of natural gas, India accounts for 0.4% of global reserves and just over
1% of production. Again, most of the gas resides in Mumbai High. Major natural
gas discoveries by a number of domestic companies hold significant medium- to
long-term potential, with Reliance Industries, Oil & Natural Gas Corporation
(ONGC) and Gujarat State Petroleum (GSPC) all reporting significant
deepwater finds.
• The oil and gas sector is dominated by state-owned enterprises, although
the government has taken steps in recent years to deregulate the industry and
encourage greater foreign participation.
• India's state-owned ONGC is the largest oil company, dominating the upstream
sector and accounting for roughly three-quarters of the country's oil output during
2006, according to Indian government estimates.
• The Indian government has introduced policies aimed at increasing
domestic oil production and oil exploration activity. As part of this effort, the
Ministry of Petroleum and Natural Gas crafted the New Exploration Licensing
Policy (NELP) in 2000, which permits foreign companies to hold 100% equity
ownership in oil and gas projects. Very few oil fields are currently being
operated by IOCs.
• The Indian Oil Corporation (IOC) is the largest state-owned company in the
downstream segment, operating 10 of India's 17 refineries and controlling about
three-quarters of the domestic oil transportation network. Reliance Industries, a
private Indian firm, opened India's first privately- owned refinery in 1999, and has
gained a considerable market share.

• There is a focus on greater gas, nuclear and hydro use in the energy mix,
although coal will continue to dominate during the forecast period to 2011.
3.5. Competitive Landscape
Key players- India Oil and Gas Sector
• ONGC Limited
• Oil India Limited
• Indian Oil Corporation Limited
• Bharat Petroleum Corporation Limited
• Hindustan Petroleum Corporation Limited
• Chennai Petroleum Corporation Limited
• Mangalore Refinery and Petrochemicals Limited
• Kochi Refinery Limited
• Cairn Energy
• Reliance Industries Limited
• Petronet LNG Limited
• Shell
• Gujarat State Petroleum Corporation
Shell-Summary
Shell India is active in lubricants, LPG, petrochemicals and solar energy. It has moved
into the LNG business and has also received permission to set up a network of 2,000
service stations. Bharat Shell Ltd (BSL) is a 51:49 JV that produces and markets a
range of Shell-branded lubricants in India through BPCL's retail outlets, authorized
dealers and to industrial customers. BPCL agreed to sell its 49% stake to Shell in
February 2007. Shell Gas (LPG) distributes LPG in western and central India, while
Shell Solar markets solar- powered home lighting units in rural districts of South India.
Shell has also opened the US$600mn LNG terminal in Hazira, Gujarat. Capacity will be
doubled to 5mn tpa in two years' time and there is scope for a further expansion to 10mn
tpa if the market continues to expand. However, volumes have so far been below
expectations as the government seeks to secure cheaper LNG contracts.

Petronet LNG-Summary
Petronet LNG was set up by the government of India to import LNG and set up
domestic LNG terminals. The company's major shareholders include GAIL, ONGC,
IOC, BPCL and Gaz de France. The JV signed a 25-year SPA with Ras Laffan LNG
Ltd (Rasgas) in 1999 for the import of 7.5mn tpa of LNG starting in 2004. Petronet's
first LNG terminal, a 5mn tpa facility located in Dahej, Guj arat, started up operations in
January 2005. The JV is also planning to construct a second 2.5mn tpa terminal in
Kochi, Kerala, but the project has been delayed until the end of 2010. The key partners in
Petronet are reportedly seeking to sell their interests or seek a winding up of the Petronet
India business.
GSPC- Summary
In August 2007, Gujarat State Petroleum Corporation (GSPC) published a shortlist of
eight IOCs that are interested in acquiring a 20-30% stake in KG- OSN-2001/03-the
Deen Dayal block-in the Krishna-Godavari (KG) basin. GSPC, wholly-owned by the
Gujarat state government, discovered gas in the KG basin in June 2005, where it
estimates gas reserves to be around 566bcm, alongside unqualified volumes of
crude oil. This is the second time GSPC has shortlisted a number of IOCs to acquire an
interest in the project. Currently, GSPC holds an 80% interest in the field, with Canada's
Geoglobal Resources and India's Jubilant Enpro owning the remainder.
ONGC
Strengths
• Unrivalled exploration portfolio;
• Leadership in domestic oil and gas supply;
• Growing downstream oil presence;
• Growing international portfolio.
W ea knesse s
• Limited financial or operational freedom;
• Cost and efficiency disadvantages;
• Declining output from mature assets.

Opportunities
• Huge cost cutting potential;
• Higher recovery rates from existing fields;
• Untapped domestic oil and gas potential;
• Strong domestic energy demand growth.
Threats
• Rising investment requirement;
• Long-term decline in oil production;
• Changes in national energy policy.
Market Position
ONGC is the Indian government's main upstream vehicle in what is a largely state-
controlled oil and gas sector. The government owns 74.14% of the company, which
accounts for approximately 61 % of India's crude oil output and
71 % of natural gas production. It is also diversifying into refining and oil distribution,
while attempting to build an international upstream asset base. ONGC now owns
89%of Mangalore Refinery and Petrochemicals Ltd (MRPL), which operates an
194,000b/d refinery in south-western Karnataka State. The company has received
authorisation to open a network of 600 service stations, while MRPL was granted
approval in February 2004 to set up 500 retail outlets. It is 30% partner to Cairn India in
the important new Rajasthan oil discoveries and has made substantial gas discoveries in
recent months, located mainly offshore in the KG basin.
Hindustan Petroleum Corporation Ltd (HPCL)
Strengths
• Strong refining and distribution position;
• Substantial retail expansion planned.
Weaknesses

• Lack of full integration benefits.
Opportunities
• Substantial cost cutting potential;
• Refinery upgrading/expansion;
• Extension of retail network;
Threats
• Fuels competition from IOCs and Indian groups;
Market Position
HPCL is the second largest integrated refining and marketing group in India,
accounting for around 22%of the country's refining capacity. The Mumbai refinery has an
installed capacity of 5.5mn tpa, while the Visakhapatnam facility has a
7.5mn tpa (152,000b/d) capacity. It has a minority stake in the 9mn tpa MRPL, although
it recently agreed to sell its stake to the unit's majority owner ONGC, and also has an
interest in the Petronet LNG consortium. Products are distributed throughout a network
of approximately 7,909 retail outlets.
Indian Oil Corporation Limited (IOCL)
Strengths
• Country's biggest oil refiner;
• Leading fuels distributor;
• Majority owner of oil infrastructure.
W ea knesse s

• Lack of integration benefits.
Opportunities
• Substantial cost cutting potential;
• Refinery upgrading/expansion;
• Extension of retail network;
Threats
• Fuels competition from IOCs and Indian groups
Market Position
State-run IOC is the country's largest commercial enterprise. It holds a 30% share of the
refinery sector, the country's largest retail and oil pipeline networks and a 56%share of
the fuels segment. The company owns and operates 10 of the country's 15 refineries
with a total processing capacity of 1.2mn b/d, equal to an approximate 40% market share.
It also operates the country's largest retail network of over 8,000 service stations,
92 aviation fuel stations and 78 LPG bottling plants, which are served by 182 bulk
storage terminals, installations and depots. Market share in the fuels segment is
approximately 56%, with the inclusion of the 2,765 service stations belonging to its
affiliate IBP. IOC also operates the country's largest network of crude and product
pipelines (7,000km) with a total transport capacity of 43.45mn tpa.
Competitors in the petrochemicals business are:
1. Reliance Petrochemicals
2. Haldia Petrochemicals Ltd.
3. Imports

3.6. Gas Supply And Demand
In terms of natural gas, the region in 2007 consumed an estimated 441bcm, with demand
of 677bcm targeted for 2012, representing the strongest growth globally (65.27%
between 2006 and 2012). Production of an estimated 350bcm in 2007 should reach
501bcm in 2012, but implies net imports rising from an estimated
91bcm per annum in 2007 to 176bcm in 2012. This is in spite of many Asian gas
producers being major exporters. Japan's share of gas consumption in 2007 was an
estimated 19.84%, while its share of production is minimal. By 2012, its share of gas
consumption is forecast to be 15.37%.
3.7. Natural Gas Marketing
Natural gas marketing is a relatively new addition to the natural gas industry, beginning
in the mid-1980's. Prior to the deregulation of the natural gas commodity market and
the introduction of open access for everyone to natural gas pipelines, there was no
role for natural gas marketers. Producers sold to pipelines, who sold to local distribution
companies and other large volume natural gas users. Local distribution companies sold
the natural gas purchased from the pipelines to retail end users, including commercial
and residential customers. Price regulation at all levels of this supply chain left no
place for others to buy and sell natural gas. However, with the newly accessible
competitive markets introduced gradually over the past fifteen years, natural gas
marketing has become an integral component of the natural gas industry. In fact,
the first marketers were a direct result of interstate pipelines attempting to recoup losses
associated with long term contracts entered into as a result of the oversupply
problems of the early 1980s.
The role of natural gas marketers is quite complex, and does not fit exactly into any one
spot in the natural gas supply chain. Marketers may be affiliates of producers,
pipelines, and local utilities, or may be separate business entities unaffiliated with
any other players in the natural gas industry. Marketers, in whatever form, find buyers
for natural gas, ensure secure supplies of natural gas in the market, and provide a
pathway for natural gas to reach the end-user.
Essentially, marketers are primarily concerned with selling natural gas, either to
resellers (other marketers and distribution companies), or end users. On average, most
natural gas can have three to four separate owners before it actually reaches the end-
user. In addition to the buying and selling of natural gas, marketers use their
expertise in financial instruments and markets to both reduce their exposure to risks
inherent to commodities, and earn money through speculating as to future market
movements.
3.8. Contracts
Physical trading contracts are negotiated between buyers and sellers. There exist
numerous types of physical trading contracts, but most share some standard

specifications including specifying the buyer and seller, the price, the amount of
natural gas to be sold (usually expressed in a volume per day), the receipt and delivery
point, the tenure of the contract (usually expressed in number of days, beginning on
a specified day), and other terms and conditions. The special terms and conditions
usually outline such things as the payment dates, quality specifications for the natural
gas to be sold, and any other specifications agreed to by both parties.
At GAIL, there are three different types of contracts for the Gas to be marketed:
1. APM Contract
2. R-LNG Contract
3. PMT Contract
PMT contract-Features
SALE AND PURCHASE OF GAS
• Sellers agree to deliver, on a Daily basis, to the Buyer one hundred percent (100%)
of the Deliverable Volume of Sales Gas at the Delivery Point and the Buyer,
provided the Gas is made available and tendered for delivery by the Sellers, agrees
to take and purchase, on a Daily basis, one hundred percent (100%) of the
Deliverable Volume of Sales Gas provided, however, that Sellers, at Sellers’ sole
discretion
• The Deliverable Volume on the date of execution of this Contract is 17.3
MMSCMD equivalent to [617,857 MMBTU/ Day] which Deliverable Volume
shall vary every Quarter based on the Delivery Profile. The use of MMSCMD in
this Clause 2.1(c) is for the purpose of reference only.
• Each of the Sellers shall, severally sell their respective Participating Interest
share of Sales Gas to the Buyer in the quantities set forth in this Contract and the
Buyer shall purchase from each Seller that Seller’s Participating Interest share of
Sales Gas and pay for such Sales Gas in accordance with the terms of this
Contract.
• During the Contract Period, if there is any Additional Gas from the Panna-
Mukta and Mid & South Tapti Fields that becomes available for sale then the
Sellers shall use reasonable endeavours to sell and deliver such Additional Gas
to the Buyer and the Buyer shall use reasonable endeavours to purchase and
receive the same, at the Delivery Point at the Sales Gas Price.
• On any Day, the Buyer may nominate for delivery at the Delivery Point a quantity
of Sales Gas up to the Deliverable Volume.
• In the event that the Sellers are compelled to shutdown the Sellers’ Facilities
or curtail production for reasons arising out of the Buyer’s inability to take Sales

Gas at the Delivery Point due to any unforeseen circumstance or an event of
Force Majeure, then the Sellers shall not only be discharged of its obligation to
deliver Nominated Daily Quantity on such Day(s)
Quarterly Take or Pay Quantity
• For each Quarter there shall be a Quarterly Take or Pay Quantity.
• The aggregate of Deliverable Volume for each Day in the Quarter; less Quarterly
Shortfall Quantity for that Quarter; less The quantities of Sales Gas which the
Sellers were prevented from supplying or the Buyer was prevented from receiving
Sales Gas due to Force Majeure during that Quarter; less The quantities of Sales
Gas which the Sellers were prevented from supplying or the Buyer was prevented
from receiving Sales Gas due to Planned Maintenance during that Quarter; less The
quantities of Sales Gas which the Buyer rejects as being Off - Specification Gas.
Quarterly Take or Pay Obligation
If in any Quarter the actual quantity of Sales Gas including Make Up Gas less
Additional Gas taken by the Buyer (the “Actual Quarterly Quantity” or “AQQ”)
is less than the Quarterly Take or Pay Quantity (such deficit being the “Deficit
Quantity”), the Buyer shall pay to the Sellers an amount equal to: (Quarterly Take or
Pay Quantity * Sales Gas Price) minus (AQQ * Sales Gas Price) For the purposes of
calculation of Quarterly Take or Pay obligation, the applicable Sales Gas Price shall be
the Tapti Gas Price.
PRICE AND BILLING
The Buyer shall pay each of the Sellers for each MMBTU of Gas on NHV basis
delivered and taken hereunder from the Mid & South Tapti Fields, a price calculated on
a Quarterly basis of the Mid & South Tapti PSC (the “Tapti Gas Price”), which is
incorporated by reference in this Contract, at a price not exceeding US
$5.57/MMBTU being the ceiling price under the terms of the Mid and South
Tapti PSC and price not exceeding US
$5.73/MMBTU under the terms of the Panna-Mukta PSC.
The Sales Gas Price is calculated excluding taxes and levies. The Buyer shall
reimburse each of the Sellers any tax (inclusive of sales tax and/or VAT) payable
by each of the Sellers to the Government, a State Government or local authority, on
account of the sale and /or transfer of title of Sales Gas to the Buyer at the Delivery
Point. For the avoidance of doubt, royalty payments under the PSCs shall be
borne by the Sellers. All costs downstream of the Delivery Point shall be borne by
the Buyer.

FORCE MAJEURE
Relief: If by reason of Force Majeure, the Sellers or the Buyer are/is rendered
unable wholly or in part to carry out their or its obligations under this Contract, then
the liability for failure to meet the obligations of the Party concerned, as long as and to
the extent that the obligations are affected by such Force Majeure, shall be excused.
If such event or series of events of Force Majeure is not remedied or mitigated
pursuant to discussions between the Sellers and Buyer within 30
Days of the meeting between the Sellers and the Buyer, then the Contract may be
terminated at the discretion of the Party not claiming Force Majeure, following a 30
days notice prior to termination, which notice may only be given after 30 Days of the
aforesaid meeting.
Duty to Mitigate Effects of Force Majeure: A Party claiming Force Majeure shall
exercise reasonable diligence to seek to overcome the Force Majeure event and to
mitigate its effect on the performance of its obligations under this Contract and
resume performance of obligations as soon as practicable once the effect of the event
of Force Majeure ceases to exist. The Party affected shall promptly notify the other
Parties as soon as the Force Majeure event has been removed and no longer prevents it
from complying with the obligations, which have been suspended and shall thereafter
resume compliance with such obligations as soon as possible.
SUSPENSION AND TERMINATION
The Sellers have not received from the Buyer due payment in accordance with the
terms of this Contract towards the Sales Gas and/or the Quarterly Take or Pay
Quantity in full (and not merely in part) within the periods specified. IF ANY OF THE
PARTIES Commits any breach of a material term of this Contract, and, if that breach is
capable of remedy, fails to remedy that breach within thirty (30) Days of notification
from the Sellers of that breach. Fails to pay to the Sellers a sum due and payable
under this Contract, within 30 Days from the date it was due for payment. Becomes
insolvent or bankrupt or makes a composition or arrangements with its creditors.
Merges with another entity where the surviving entity has not assumed in full the
Buyer’s rights and obligations under the Contract.
APM Contract- Features
• In this type of contract, the prices of gas transmission are regulated by the
government of India.
• Shipper pays the transmission charges every fortnight.
• Shipper also pays the charges towards spur line.
• The authorized and the unauthorized overrun charges are also payable for a

fortnight.
• As for billing and payment, the transporter shall deliver electronically, an
invoice as soon as possible to the shipper.
• Force Majeure remains the same as the PMT Contract.
• These contracts last for more than 10 years.
• Until the termination of the agreement, the amount of the bank guarantee
as mentioned above shall be as per the amount given in the exhibit for respective
contract years and the shipper shall renew the bank guarantee 15 days before its
expiry.
R-LNG Contract- Features
• Either party may propose to extend the agreement beyond the basic period by
giving notice one year prior to the expiry of the agreement.
• The agreement duration is generally for 10 years.
• Seller and buyer are aware that gas under this agreement and other gas can be
supplied through the same pipeline in a commingled form.
• For each contract year, there is Annual Take or Pay Quantity
(ATOPQ) which will be taken and paid for or paid for if not taken by the buyer.
• The ATOPQ shall be 90% of the annual contracted quantity.
• The buyer shall during each contract year, pay for the Actual quantity of gas
taken or for 90% of ATOPQ for the relevant contract year.
• The price of the gas includes basic custom duty, purchase tax and exclusive
of all other taxes, duties and statutory levies. Sales tax, entry tax, any other taxes
and duties shall be payable from time to time.
• The buyer has to pay to the seller within 3 business days after the receipt
of the fortnightly payment statement or seven days for the ATOP whichever is
applicable.
• Termination occurs if buyer fails to pay a sum for sixty days or fails to take gas
for a continuous period of three month.
• The same occurs if the seller fails to supply gas for a period of three months.

In a nutshell, the variables which actually distinguish the contracts are:
1. Name of the contract.
2. Contract effective date.
3. Contract expiry date.
4. Supply pressure
5. Shut down
6. TPT charges
7. Billing
8. Payment duration
3.9. Gas Pricing In India
Natural Gas Pricing
1. At present, there are broadly two pricing regimes for gas in the country,
i.e., gas priced under APM and non-APM or free market gas. The price of APM
gas is set by the Government. As regards non- APM/free market gas, this could
also be broadly divided into two categories, namely, imported LNG and gas
produced from JV fields. While the price of LNG imported under term contracts
is governed by the SPA between the LNG seller and the buyer, the spot cargoes
are purchased on mutually agreeable commercial terms. As regards JV gas,
its pricing is governed in terms of the PSC provisions. At present, out of the total
gas supply of 95 MMSCMD in the country, approx. 55 MMSCMD is APM gas
and rest is non-APM gas (20 MMSCMD JV gas and 20 MMSCMD RLNG).
APM gas, which comes from the existing fields of ONGC and OIL given to
them on nomination basis by the Government, is on the decline; while it forms
about 60% of the total gas available at present, its share is likely to come
down to around 15-20% by 2011-12 while the quantities under RLNG and JV
production will go up.
2. Background of APM Gas Pricing
2.1 Gas Pricing Prior to 1997
It was decided by the Government to fix the prices of natural gas on cost plus
methodology in 1986 the price of natural gap was fixed at Rs.1400/MSCM by
Government w.e.f. 30-1-1987. Subsequently, on the recommendation of the
committee under the chairpersonship of Dr. Vijay L Kelkar, the price of

natural gas was revised to Rs.l,550/MSCM, w.e.f. 1-1-1992, with provision to
increase the gas price by Rs. 100/MSCM p.a. up to Rs. 1850/MSCM by 1995.
2.2 Gas Pricing W.E.F 01.10.1997
2.2.1 On the recommendations of an expert committee on Natural Gas pricing
under the Chairmanship of Shri T.L. Sankar, the Government decided to shift
gas pricing methodology from cost plus basis to import parity pricing.
Accordingly, the following pricing mechanism was put into effect from October
1, 1997.
2.2.2 The gas prices were linked to the cheapest alternative liquid fuel:
Fuel Oil basket (Average of four fuel oils, viz.. Cargoes FOB, Med basis,
Italy (1% sulphur); Cargoes CIF, NEW basis ARA (1% Sulphur); Singapore,
FOB, HSFO 180 cst (3.5% surplus); and Arab gulf, FOB, HSFO, 180 cst
(3.5% sulphur)) with progressively
increased fuel oil parity as given below:
Year % of Fuel Oil Parity (Other
than N.E.)
1997-98 55%
1998-99 65%
1999-2000 75%
2.2.3 The Consumer Price was, however, subject to a ceiling of Rs.2,850 per
MSCM and a floor of Rs.2,150 per MSCM. The consumer price of gas was
intended to be reviewed after 3 years with a view to achieve 100% Fuel Oil
Parity pricing over 4th and 5th year, i.e. in 2000-01 and 2001-02. However,
this did not happen and the price of Rs.2,850/MSCM continued till
30.06.2005, which was about
34% of the then fuel oil prices.
2.3 Pricing Mechanism w.e.f. 01.07.2005.
2.3.1 The consumer price was revised to Rs.3,200/MSCM for the following
categories of consumers. It was also decided that all the APM gas
(estimated at around 55 MMSCMD) will be supplied to only these
categories.
a. Power sector consumers
b. Fertilizers sector consumers
c. Consumers covered under court orders
d. Consumers having allocations of less than 0.05 MMSCMD.

2.3.2 It was decided that the price of gas supplied to small consumers and
transport sector (CNG) would be increased over the next 3 to 5 years to the
level of the market price. With effect from 06.06.2006, the APM gas price to
small consumers and CNG sector has been increased to Rs.4608 / MSCM.
2.3.3 It was decided that the gas price to the consumers other than those
stated in para 2.3.1, which were hitherto getting gas at APM price through
GAIL network, would be market determined.
Existing Producer Price & Consumer Price
Majority of Gas produced by ONGC, known as APM gas, is currently sold to
GAIL of the price regulated by the Government. This price at which ONGC sells
gas to GAIL is known as producer price. The price of this gas does not vary state
wise/offshore areas, instead varies for North East Consumers and General
Consumers (other than North East Consumers). The price at which GAIL sells
the gas procured from ONGC, is called consumer price.
3. Pricing of R-LNG
A contract was signed with Rasgas, Qatar for supply of 5 MMTPA LNG
(equivalent to about 18 MMSCMD] by Petronet LNG Limited and supplies
were commenced from April 2004. The price for LNG has been linked to
JCC crude oil under an agreed formula. However, the FOB price for the period
up to December 2008 has been agreed at a constant price of $2.53/MMBTU.
This price translates to RLNG price of $3.86/MMBTU ex-Dahej terminal.
In order to make the price of RLNG affordable, EGoM has decided in the
meeting held on 11.1.07 for pooling of prices of 5 MMTPA RLNG
presently being imported from Qatar with the price of new RLNG being
imported on term contract basis. This Ministry accordingly issued orders on
6.3.07, in consultation with Ministry of Law, in compliance with the decision of
EGoM. The pool price ex- Dahej of RLNG for various consumers would
be about US$
4.92/MMBTU.
4. Pricing of Gas under Pre-NELP Production Sharing Contracts - PMT
and Ravva JV Gas
4.1 Production Sharing Contracts were executed by GOI with Ravva consortium
and PMT consortium on October 28, 1994 and December
12, 1994 respectively. PSCs contain the following pricing provisions: (in
$/MMBTU)

(1% Sulphur); Singapore, FOB,
HSFO 180 est (3.5% surplus); Arab
gulf, FOB, HSFO, 180 est (3.5%
sulphur))
Ravva Price linked to average of Fuel Oil
for preceding 12 months (3%/3.5%
Sulphur residual fuel oil of
Singapore, FOB. Rotterdam Barge
and Med FOB)
1.75 3.00 Apr'97
4.2 In terms of PSC for PMT, the ceiling prices are to be revised to
150% of 90% F.O. basket (average of the preceding 18 months), after
7 years from the date of first supply. Thus, the revision was due w.e.f. June 2004
for Tapti and February 2005 for Panna Mukta. The PMT gas prices have
since been revised. While PMT sells 4.8 MMSCMD of gas themselves for
the balance quantity of about 6 MMSCMD, GAIL paid @ $3.86/MMBTU
during 2005-06 and is paying @
$4.75/MMBTU w.e.f 1.4.06 based on counter-matching the price offered by
prospective consumers in response to the bid floated by the consortium.
However, this gas is being supplied by GAIL to power and fertilizers sector
consumers along HBJ at APM price and adjustments being made through the gas
pool account mechanism in terms of the pricing order of 20.6.2005. This pricing
order states that owing to the existing supply linkages and operational
requirements, it may well happen that the customers entitled for APM gas get
physical supplies of gas produced by the joint venture or from suppliers other
than ONGC/OIL at market price and vice versa. With a view to operationalise
the aforesaid decision, the Gas Pool Account mechanism would be
utilized, with the inflow into the pool account coming from APM gas sales to
consumers not entitled for APM gas at market price and outflow would be for
purchase of non-APM gas to supply to the consumers entitled for gas at APM
price. This arrangement would be subject to the ceiling of existing available
APM gas from ONGC and OIL (about 55 MMSCMD).
JV Price formula Floor
Price
Ceiling
Price
Commencement
of gas supplies
PMT Price linked to a basket of
international average of
preceding 12 months Fuel Oil
prices (Cargoes FOB, Med
basis, Italy (1% sulphur);
Cargoes CIF, NEW basis ARA
2.11 3.11 June'97-Tapti
Feb'98-Panna-
Mukta

4.3 In case of Ravva, the revision of ceiling price is due after 5 years from the
date of supply and the revised ceiling price is to be negotiated between the
Buyer and the Seller in good faith. The price revision for Ravva was due w.e.f.
April 2002. The price revision has been effected w.e.f. July 1, 2005 and
GAIL has been paying @
$3.50/MMBTU since then. The share of this gas going to APM consumers is
being charged by GAIL at APM price, with adjustment through gas pool account
mechanism. The total quantity of this gas is around 1 MMSCMD.
The following table sums up the prices of some of the most important fields in
the country (mostly short-term and in small quantities):

Prevailing gas prices under various PSCs (July 2007)
The prevailing prices as per signed contracts under various PSCs are:
Name of
Buyer Approximate quantity Price Basis
Panna-Mukta & Tapti
GAIL
5.7 MMSCMD from
1.4.2005 $ 3.86/MMBTU Fixed Price
5 MMSCMD from $ 4.75/MMBTU
1.4.2006 for 2 years
GSPC,
GGCL,
IPCL, RII
4.6 MMSCMD from
1.4.2005 to March 2006 $ 4.08/MMBTU Fixed Price
GSPC,
GGCL,
IPCL, RIL
1.8 MMSCMD from
1.4.2006 to March 2008 $ 5.70/MMBTU Fixed Price
Torrent
Power
0.9 MMSCMD from New
revised plan of development
(NRPOD) Gas scheduled
from September 2007 (total
expected gas production from
NRPOD is 5.5
MMSCMD) $ 4.75 MMBTU Fixed Price
RUVUNL
1.5 MMSCMD from NRPOD
Gas scheduled from
September 2007 $ 4.60/MMBTU Fixed Price
GGCL
1.65 MMSCMD from
NRPOD Gas scheduled from
September 2007 $ 5.70/MMBTU Fixed Price
Ravva

GAIL
1.10 MMSCMD from existing
discoveries of Ravva
1 MMSCMD from
Satellite field
$ 3.50/MMBTU
effective from 1st
July 2007
$ 4.30/MMBTU
effective from
September 2006
Fixed Price
Lakshmi & Gauri
GSPC 0.15 MMSCMD
$ 5.50/MMBTU -
June'07 Fixed Price
GPEC 0.9 MMSCMD
$4.75/MMBTU-
Nov'06 Fixed Price
GGCL 0.5 MMSCMD
$ 4.60/MMBTU-
June'06
Floor price is
$
3.11/MMBTU
and ceiling is
$
4.60/MMBTU
Price linked
up with 95%
crude basket and
5% with Naptha
Bheema-
CB-ONN-
2000/02 0.3 MMSCMD
$ 4.50/MCF which is
equivalent to
$4.50/MMBTU Fixed Price

The only long term contract in the country was the 7 year contract
with Panna Mukta Tapti fields as detailed below:
Gas price
(USD/
mmbtu)
Terms of sale
Nature
of Gas
price
Quantity
(MMSCMD)
Contract term
Buyer : GAIL
(for various power,
fertilizer and
industrial users)
2.11 to 3.11 Floor -
2.11
Cap-3.11
10 7 years (upto
2004-05)
It said that as can be seen, from the above tables, gas prices are much lower for
long term contracts and with larger volumes than short term contracts with small
quantities.
5. Pricing of Gas With Reference to NELP Provisions:
As per the provisions of PSC under NELP, the price of natural gas for sale to
consumers shall be market driven. Prior approval of MoPNG has to be
obtained for the formula or the basis on which the price is fixed. It has been
provided that the Contractor shall sell all Natural Gas produced and saved
from the Contract Area by arms-length transactions.
Gas Pool Account
In 1992, the Government established the Gas Pool Account in order to encourage the
development of the gas industry in India and to compensate the companies involved
in the exploration, development and marketing of gas for the low margins on the
development and sale of gas at prices fixed by oil ministry. The landfall price and
producer price is credited to the gas pool account. GAIL maintains the Gas Pool
Account on behalf of the government.
Under the current pricing mechanism, GAIL collects Rs. 2.5 billion every year from
natural gas consumers on behalf of the gas pool account. This sum is used for the
following purposes:
i. Payment of higher international gas prices for the new joint-venture companies;
ii. Compensation to Oil India Limited (OIL) for subsidizing prices in the North-East;
iii. Compensation to GAIL/OIL for increases in operating cost; and
iv. Exploration and development of smaller fields.

The balance is transferred to the Central Exchequer. Gas Pool Account has now been
dismantled.
Options for gas pricing policy
The Production Sharing Contracts (PSCs) provide for pricing of gas on the basis of sale
on arms-length basis. The role of the Government is to approve the valuation of gas
for the purpose of determining Government take. In order to provide transparency in
approving valuations, the Government formed a Committee in August 2006 to
formulate guidelines for approving natural gas price formula / basis for giving
Government approval under the Production Sharing Contracts.
The Committee was headed by Joint Secretary & Financial Advisor, Ministry of
Petroleum & Natural Gas and had Director General, Directorate General Hydrocarbons
and concerned Joint Secretaries as other members. The Committee held extensive
consultations with various stakeholders, including the producers as well as the
consumers, besides other expert organizations, before finalizing its report. The
Committee has recommended that in all situations where a price discovery through
competitive bidding is possible, there should be no need to apply any other principle
for valuation of gas. Once a market-determined price has been discovered between the
suppliers and customers through a transparent competitive bidding process, there should
be no need for the Government to interfere with the same.
Further, it has said that in the absence of a market determined price discovered
through a transparent bidding process, where valuation of gas has to be necessarily done
by Government, it may be done based on the price in the most recent competitively
determined contract in the region duly indexed to the present. Indexation is to be done
as per provisions of the market determined reference contract, as each market-
determined contract sets out various terms and conditions of supply, including
the price review mechanism.
The Committee has noted that each contract, normally, has a price review clause every
five years. If the price stands reviewed as per the reference contract, that may become
the new reference price. For interim periods, the Committee has recommended that
indexation may be linked to percentage increase in price of cheapest liquid fuel, i.e.,
Furnace Oil (FO), which is not only the cheapest liquid fuel but has also shown
least price volatility in recent years. It was of the view that the above valuation may be
applied only when actual supply has commenced and the price has not been discovered
through the market mechanism. However, if the actual price, at which any producer
supplies to any consumer, is higher than the one arrived at by the above methodology,
then the higher price is to be reckoned for Government take. It would be ideal if the
Committee's approach had never to be applied, but if the eventuality does arise, DG
DGH and Director, PPAC will do the calculations based on Committee's
recommendations. It would be DGH's responsibility to ensure that the Producer remits
the Government's take accordingly.
The Government has since issued orders for constitution of an Empowered Group of
Ministers to consider issues pertaining to pricing of natural gas produced in the country.

The EGoM has held two meetings, which were inconclusive. A sub-committee of
senior brass from the Ministries of Finance, Law, Power, Petroleum, Planning
Commission and EAC is currently looking into the pricing formula proposed by
RIL for pricing its gas for D6 block in KG basin. The recommendation of this sub-
committee are likely to be submitted shortly to the EGoM, expected to meet on
September 12, 2007.
Issues related to supply and pricing of natural gas (July 2007)
• Natural Gas meets only 8.5% of the total energy requirement of the country
as against 56% share of coal. The country has natural gas reserve of 37 TCF
which is about is 0.6% of the world natural gas reserve. The fertilizer and power
sectors are the major consumers of natural gas used in the country. While 79% of
the gas requirement of the fertilizers plants is being met presently, another 7.73
MMSCMD of gas is required for meeting the shortage of existing gas
based plants. For conversion of Naphtha and FO/LSHS based fertilizer units,
about 40 MMSCMD would be required. Thus, the total requirement for the
fertilizer sector would be about 86 MMSCMD. Against the projected demand of
gas of 279.43 MMSCMD in 2011-12, total conservative estimate of supply is
191.42 MMSCMD, leaving shortfall of about 88 MMSCMD. This would need
to be met through imports and expeditious action on the exploration and
development of discoveries in the domestic area.
• On the gas pricing front, the MoP&NG informed that the system of
100% Government controlled pricing mechanism is being replaced by free
market pricing through de-regulation. Before 1997 Government fixed the price
of natural gas on cost plus methodology. Shri T.L.
Shankar Committee recommended to shift gas pricing methodology from cost
plus basis to import parity pricing. However, consumer price continued to be
regulated at 34% of then fuel oil prices till 2005. The pricing mechanism of gas
under pre-NELP production sharing contract is determined by linking it to a
basket of international average of preceding 12 month fuel oil prices with a
floor and ceiling.
• Under NELP regime, the contractor makes an upfront commitment of risk
money without any liability on the Government. The full development cost is
recoverable in the event of discovery. The cost recovery limit and profit
petroleum sharing split are biddable parameters. The management committee
works as approval body for the development plan submitted by the contractor.
Profit share is determine by pre-tax investment multiple (PTIM) formula which
rewards the Government only at higher levels of revenues.
• Under the Production Sharing Contract (PSC), the contractor is free to market
gas in the domestic market subject to the policy of the Government on gas
utilization. Article 21.6.1 allows contractor to sell all natural gas from the
contract area at arms length prices to the benefits of parties to the contract.
Under Article 21.6.3, the Government has the right to approve the gas price
formula keeping in view the prevailing gas pricing policy including the policy, if

any, on linkage of gas prices with liquid fuels. Ministry of Petroleum &
Natural Gas have drawn up a set of guidelines for approving gas price/ formula
for the purpose of determining Government take under NELP contracts. These
provide for valuation based on the most recent competitively determined
price in the region duly indexed to the present.
• KG-DWN-98/3 PSC provides for the Government to take its share of profit
petroleum in cash or kind by exercising such an option on an annual basis. So
far the Government has not exercised its option to take any gas in kind
separately and entire profit petroleum has flowed to the Government in cash
in all PSCs. In case the Government decides to take its share in kind, the
following issues would need to be settled first:
i. The Government would have to designate a Government nominee,
ii. The price of such gas would have to be at par with the price of gas fixed
by the contractor in order to avoid financial losses accruing in the
consolidated fund of India,
iii. In view of the uncertainty in estimation of profit gas, the Government
nominee may have to keep its infrastructure idle in the years when profit
gas level fluctuates to a lower level.
• Ministry of Power stated that the construction of pipeline is linked to the
production centre unlike the transmission part in the power sector which is
insulated from the power production entities. As opposed to tariff based bidding
in the power sector, the producer linkage for the construction of pipeline makes
the system monopolistic. In reply, Ministry of Petroleum and Natural Gas stated
that the risk taking is discouraged by providing advance tie-up with producer
agencies before granting NOC for the construction of pipeline. However, the
tariff for transportation would be regulated.
• Department of Fertilizer stated that the Govt. had directed that fertilizer
sector should get priority in natural gas allocation. The Govt. had also approved
the conversion of non-gas based fertilizer plants to gas based. It added that
India could emerge as the potential hub for urea manufacture, which would
require additional 95 MMSCMD of gas by the year 2011-12. It also suggested
that certain equalization of gas prices would be necessary so that fertilizer
availability at all places could be ensured.
• Planning Commission enquired whether the Indian fertilizer
companies would be able to compete in the international market as they
function under protected environment. It also opined that the freight
equalization for natural gas may not be possible. In reply to his query on
optimal production profile, DGH informed that the production profile
determine the quantum of output technically possible over the life cycle of the
source and the contractor cannot change the production without prior approval.
• DGH informed that the year-wise activity and development plan are approved
by the Management Committee. DGH also undertakes audit of the technical plan,
production profile and costs.

• It was observed that Ministry of Petroleum and Natural Gas should firm up
demand and supply projections and draw up action plans with timelines for
ensuring that the projected supplies become available. These may be included in
the revised agenda note for ECC along with issues, if any, requiring decisions. It
was also observed that the following issues would require further discussions
with stakeholders before firming up the recommendations on pricing
formula/basis for the gas from KG-DWN-98/3 :
i. the PSC stipulation relating to CAPEX, the system of approval of the
developmental plan, production profile, technical plan, the system of audit by
the Government and the need to make the system more transparent;
ii. the details and methodology for the administration of the provisions of PSC
providing sale of natural gas produced from the contract area at competitive
arms length prices;
iii. the gas utilization and pricing policy;
iv. the gas price formula and steps of the bid process submitted by M/s Reliance
India Ltd to the Ministry for their approval including the rule for market
clearing;
v. Whether to exercise the option for taking profit gas in kind or cash ?
The Consumer Price of Natural Gas, R-LNG and HVJ / DVPL / DUPL Transmission
Tariff and Marketing Margin, adopted for computing the financial targets are given in
the following table:-
(Rs./'OOO SCM)
Item Price
Domestic Gas - APM 3200
Domestic Gas - APM (<50000 SCMD etc.) 4608
Domestic Gas - Market Driven 7596
Domestic Gas - NE Region - APM 1920
Domestic Gas - NE Region - (Small Consumers) 2765
Domestic Gas - NE Region - Market Driven 3200
Panna - Mukta - Tapti JV Gas 7596
Ravva JV Gas 5597
Ravva Satellite 6877
R-LNG (Pooled) - Outside Gujarat 8232
R-LNG (Pooled) - Inside Gujarat 7915
Transmission Tariff (HVJ / DVPL) 954
Transmission Tariff (DUPL) 1037
Marketing Margin - R-LNG (Levelized) 224

3.10. Gas Demand Supply Projection
Petrochemicals/Refineries/Internal Consumption and Sponge Iron/Steel and
other industries The current demand as per the industry estimates in the
Petrochemicals/Refineries and Internal Consumption (of Gas Industries) sectors is
about 25.37 MMSCMD in 2005-06. An annual growth rate of about 7 percent is
assumed during the XI plan period, which would result in a demand of 33.25
MMSCMD by the terminal year of the XI Plan.
Similarly, the sponge iron/steel sector is also expected to grow at the same rate of 7
percent from the current level of 6 MMSCMD, reaching a level of
7.86 MMSCMD by the terminal year of the XI plan.
The demand from various sectors has been compiled in the Report by
Working Group as given below:-
Sector Wise Gas Demand Projections (2007-2012)
2007-08 2008-09 2009-10 2010-11 2011-12
Power 79.70 91.20 102.70 114.20 126.57
Fertilizer 41.02 42.89 55.90 76.26 76.26
City Gas 12.08 12.93 13.83 14.80 15.83
Industrial 15.00 16.05 17.17 18.38 19.66
Petrochemicals/Refineries/Internal
Consumption
25.37 27.15 29.05 31.08 33.25
Sponge iron/Steel 6.00 6.42 6.87 7.35 7.86
Total 179.17 196.64 225.52 262.07 279.43

140
120
100
80
60
40
20
0 2007-
08
2008-
09
2009-
10
2010-
11
2011-
12
Power
Fertileze
r
City Gas
Industri
al
Petrochemicals/R
efi neries
Sponge iron/Steel

Overall Gas Supply projections during XI Plan
The supply projected by ONGC and OIL in the Plan period is expected to fall
from 57.28 MMSCMD in 2007-08 to 51.08 MMSCMD in 2011-12. Supply from
Private players/JVs is expected to increase from 23.26 MMSCMD to about
57.22 MMSCMD in 2011-12. This increase from private players, considered in
the Working Group report, is primarily due to the 40 MMSCMD gas supply
addition from RIL from 2008-09 onwards. DGH had then projected expected
additional supplies of 20, 30 and 40 MMSCMD from RIL fields in 2009-10,
2010-11 and 2011-12 respectively and 54 MMSCMD from GSPC in each of the
above years. However, later DGH has increased the expected availability of natural
gas from KG D/6 blocks to 80 MMSCMD. DGH has also indicated that the
anticipated availability of gas from GSPC fields would be 4.5 MMSCMD by 2011-
12.
In the table below, the gas availability which is confirmed by DGH is shown as (B)
and is the basis of the conservative scenario. The gas availability expected, but which
is yet to be certified by DGH, is shown as (C) and is the basis of the optimistic
scenario in the table below:
Source 2007-08 2008-09 2009-10 2010-11 2011-12
ONGC + OIL (A) 57.28 58.42 55.69 54.67 51.08
Pvt./JVs (As per DGH) (B) 23.26 61.56 60.28 58.42 57.22
Projected Domestic Supply
(A+B)
80.54 119.98 115.97 113.09 108.30
Additional Gas Anticipated
(C)
74 84 94
Total Projected Supply
Conservative Scenario (A+B)
80.54 119.98 115.97 113.09 108.30
Total Projected Supply
Optimistic Scenario (A+B+C)
80.54 119.98 189.97 197.09 202.30

250 ONGC + OIL (A)
200
150
100
50
0
2007-
08
2008-
09
2009-
10
2010-
11
2011-
12
Pvt./JVs (As per
DGH)(B)
Projected Domestic
supply
Addtnl Gas Supply
Total proj Supply
Cons. Scenario
Total proj Supply
Opt. Scenario
Looking at the overall demand projections and even the optimistic scenario of
expected domestic supplies, it is very clear that there would be a supply shortfall.
Therefore, there is a need to step up imports in the coming 5 years. There is already an
import of LNG to the tune of 18 MMSCMD by PLL at Dahej. The 5 MMTPA Dahej
terminal of PLL is operating at full capacity.
The Hazira terminal of Shell with a capacity of 2.5 MMTPA is also operational. The
Dahej terminal is set to expand to 10 MMTPA by 2010-11. Besides, the planned
Kochi terminal of PLL with a capacity of 2.5 MMTPA (expandable to 5 MMTPA) is
expected by 2010-11. The 5 MMTPA Dabhol terminal is projected to be fully
operational by 2009-10. To begin with, the supplies would be 1.2 MMTPA, which
would increase to 2.1 MMTPA in
2008-09 to cater to the Dabhol Power Plant. This terminal would also enable a
merchant sale volume of 2.9 MMTPA in 2009-10 when long term LNG is contracted.
When LNG terminal at Mangalore is taken up, 1.25 MMTPA imports could be
expected by 2011-12. Given this scenario, the LNG supply is projected to reach a
level of 23.75 MMTPA by the year 2011-12

(Potentially it can add up 83.12 MMSCMD supplies at full capacity). The overall
LNG projections are given below:-
LNG Supply Source 2007-
08
2008-
09
2009-
10
2010-
11
2011-
12
Dahej 5.00 5.00 7.5 10.00 10.00
Hazira 2.50 2.50 2.50 2.50 2.50
Dabhol 1.20 2.10 5.00 5.00 5.00
Kochi - - - 2.50 2.50
Mangalore - - - - 1.25
Total LNG Supply
(MMTPA)
8.70 9.60 15.00 20.00 23.75
Total LNG Supply
(MMSCMD)
30.45 33.60 52.50 70.00 83.12
Assumption 1) Hazira expansion to 5.0 MMTPA is not considered in
XI Plan.
2) Mangalore terminal is expected to be partially commissioned in
2011-12

90
80
70
60
50
40
30
20
10
0
2007-
08
2008-
09
2009-
10
2010-
11
2011-
12
Dahej
Hazira
Dabhol
Kochi
Mangalore
TOTAL TPA
TOTAL SCMD

The LNG option would to a great extent augment the indigenous supplies to meet the
demand shortfall. Given the two scenarios of indigenous supply, the total supply,
including LNG, is expected to increase from 110.99 MMSCMD in 2007-08 to a
level of 191.42 MMSCMD in 2011-12 under conservative scenario. Under the
Optimistic Scenario, the total gas supply is expected to increase from 110.99 in 2007-
08 to 285.42 MMSCMD in 2011-12.
Demand - Supply Gap for Natural Gas
It is expected that there would be a demand - supply gap (shortfall in supply) to the
extent of 68.18 MMSCMD in 2007-08 which would fall to 43.06 MMSCMD in
2008-09 in both the scenarios. From this level, the gap would increase steadily to
88.01 MMSCMD by 2011-12 in the conservative scenario, whereas under the
optimistic scenario, the gap would by and large be bridged from 2009-10 onwards
and there is expected to be a demand- supply balance during the last 3 years of
the XI Plan period. The overall demand-supply balance is presented below:
Overall Gas Demand Supply projection during XI Plan
Supply 2007-08 2008-09 2009-10 2010-11 2011-12
Total Supply Conservative
Scenario
110.99 153.58 168.47 183.09 191.42
Total Supply Optimistic
Scenario
110.99 153.58 242.47 167.09 285.42
Demand (MMSCMD) 179.17 196.64 225.52 262.07 279.43
Demand Supply Gap I 68.18 43.06 57.05 78.98 88.01
Demand Supply Gap II 68.18 43.06 -16.95 -5.02 -5.99

300
250
200
150
100
50
0
-50
2007-
08
2008-
09
2009-
10
2010-
11
2011-
12
Total-Cons.
Scene Total-Opt.
Scene. Demand
MMSCPD
Demand Gap I
Demand Gap II

Projections for the next decade
PMO has desired that estimates of demand and supply of natural gas for the next
decade should be made. While some reasonable projections have been
made for the 5 year period, it has not been feasible to make projections regarding
indigenous production and demand for the next decade.
3.11. GAIL’s Pipeline Network
Having a strong distribution network or in GAIL’s case, a comprehensive pipeline
network forms a vital part of its marketing strategy. Increasing the customers
and retaining the existing ones can be achieved by having a good pipeline network.
Good pipeline network caters to the needs of the customers and they become brand
loyal.
Since inception, GAIL has been the undisputed leader in the marketing,
transmission and distribution of Natural Gas in India. As India's leading Natural Gas
Major, it has been instrumental in the development of the Natural Gas market in
the country.
GAIL has a market share of 87% of the gas transmission business and 73% of the
gas marketing business in India. GAIL's vast operations and projects include:
• 8000 kms of Natural Gas high-pressure trunk pipelines
• Trunk Pipelines with the capacity to carry 130 MMSCMD of Natural Gas
across India
• Supplying nearly 70 MMSCM of Natural Gas per day as fuel to power plants
for generation of about 5200 MW of power, as feedstock for gas-based
fertilizer plants to produce about 11 MMTPA of urea and to over 500 other
small, medium and large industrial units to meet their energy and process
requirements.
• GAIL's 2,800 km long Hazira-Vijaipur-Jagadishpur (HVJ) pipeline and 610
km Dahej-Vijaipur pipeline (DVPL), between them, cater to all the gas based
power plants, fertilizer plants, and industries along the entire West-North
corridor of India.
GAIL also provide access to other pipelines, to third parties, for the transmission of
Natural Gas. Currently GAIL transports about 8 MMSCMD of Natural Gas on behalf
of various shippers.
GAIL has plans to construct National gas grid by connecting various pipelines
but the development of the concept is taking time. GAIL had already completed the

Dahej - Vijaipur pipeline in 2004 for evacuation of RLNG from PLL Dahej LNG
terminal, Kelaras - Malanpur pipeline in July 2006 to supply gas near Gwalior in
Madhya Pradesh, Vijaipur -Kota pipeline in Jan 2007 for supply of natural gas
to the customers in Rajasthan Region and Jagoti - Pithampur pipeline network in
March,2007 for supplying gas to customers in M P region near Indore.
Details of Gas Pipelines in various states:
Length in Kms. DIA.
Gujarat 1553 42" TO 8"
Tripura 61 12" TO 4"
Assam 8 24" TO 3"
Tamilnadu 259 18" TO 4"
Andhra Pradesh (AP) 834 18" TO 4"

Madhya Pradesh (MP) 1421 42" TO 18"
Rajasthan 500 36" TO 4"
Uttar Pradesh (UP) 1482 36" TO 1"
Maharashtra 1300 30" TO 4"
Haryana 86 14" TO 4"
Delhi 96 18" TO 4"
Total Natural Gas Pipelines 8000
Recent Projects Commissioned
1. Dahej - Uran Pipeline
2. Dabhol - Panvel pipeline Project
Major Projects Under Execution
GAIL has also submitted the proposal for Expression of Interest (EOI) for laying
following pipelines for transportation of gas to meet the gas demand of customers.
• Dadri-Bawana- Nangal Pipeline
• Chainsa-Gurgaon- Jhajjar- Hissar Pipeline
• Jagdishpur - Haldia pipeline
• Kochi- Kanjikkod- Mangalore / Bangalore Pipeline
• Dabhol- Bangalore Pipeline
• Kakinada-Haldia Pipeline

3.12. Petrochemical Marketing
GAIL made an entry into the petrochemicals market on April 19, 1999. Since
then, polymer sales have increased nearly three-fold in volume, from
110 KT in the Financial Year 1999-2000 to 311 KT in the Financial Year
2005-2006, and nearly four fold in value, from Rs 479 crore in the Financial Year
1999-2000 to Rs.1842 crore in the Financial Year 2005-2006. Out of a total Gross
Margin of Rs. 3953 crore, polymers have contributed 22% in 2005-06.
For GAIL, petrochemicals were part of its master plan for vertical
integration and utilization of every fraction of natural gas - GAIL uses natural
gas as the feedstock for the manufacture of HDPE/LLDPE. Instead of setting up its
plant in western India (Maharashtra and Gujarat) as was traditionally the case, GAIL
opted to base it in northern India, looking at the large consumer base and
demand for plastics. In doing so, they (GAIL) were able to provide impetus to the
regional petrochemical downstream units to expand their production capacity in
view of the proximity of source of raw material.
• Today, more than one-fifth of the polymers (HDPE, LLDPE)
consumed in India are produced and marketed by GAIL.
• GAIL's polymer products are environment-friendly and fully
recyclable.
• GAIL has established North India's only gas based integrated
petrochemical complex in Pata, District Auraiya, Uttar Pradesh, about
350 km from Delhi. This ISO 9000 and ISO 14000 certified facility
has a capacity of 3,00,000 TPA of Ethylene and 3,10,000 TPA of
Polymers (HDPE & LLDPE).
• Capacity expansion to 4,40,000 TPA (Ethylene) is under way.
• An additional HDPE plant with 1,00,000 TPA capacity is being set up, with
technology from Mitsui, Japan.
• GAIL’s polymer products include wide range of HDPE grades from plant of
100 KTA capacity based on technology from Mitsui, Japan, and wide range of
HDPE and LLDPE grades from its swing plant of 210 KTA capacity based
on technology from NOVA chemicals, Canada.
• GAIL markets its LLDPE and HDPE under the brand names G-lene and G-
lex.
GAIL’s petrochemical Marketing can be explained by the 4 P’s of Marketing

Products
GAIL offers a wide range of grades to cater to diverse applications.
• Strategically located stockiest centers.
• Multiple delivery modes, supply from production sites as well as stock
points.
• Efficient supply chain management ensure customer needs are met on time,
with products that are of consistent quality.
The combination of GAIL’s wide range of Polyethylene grades based on
internationally proven technologies, professional services from the Petrochemical
Marketing Group (PMG), Zonal Offices and GAIL Polymer Technology Centre
(GPTC) and commitment to customer value provides GAIL the ideal base to nurture a
long term business relationship with the customers.
• G-lex high density polyethylene manufactured by GAIL is based on the
slurry polymerization process of Mitsui, Japan.
• It provides a variety of grades. Its high molecular weight grades are suitable
for a wide range of applications, including HM films, Pipes and Blow
moldings.
Product Length of G-lex:
Blow Molding: G-lex blow molding grades have excellent processability, impact
strength, stiffness and ESCR. The application includes small to medium size
containers like Lube oil, shampoo, cosmetic, pesticide, Vanaspati and Edible oil
containers.
Pipe: G-lex high molecular weight pipe grade is bi-modal and has excellent
processability, chemical resistance and mechanical properties. Major usages are in
the potable water system, sprinkler and sewerage. It conforms to hydrostatic
pressure requirement as per PE 80 classification of IS 4984 . G- lex
E52A003/E52U003(with UV stabiliser)are suitable for Optical Fiber Cable duct
applications .
Film: G-lex HM film grade is bi-modal in nature with excellent processability, and
an optimum balance of toughness and impact strength. It has an excellent
drawdownability for making thin gauge film. Major usages are carry bags,
industrial liners, grocery bags, shopping bags, and multilayer packaging film for edible
oil packaging etc.

Monofilament: G-lex monofilament grade has an excellent extrudability and good
balance between linear strength and knot strength. Major usage is in ropes and twines.
Product Length of G-lene:
Raffia : G-lene raffia grade has an excellent process ability and superior mechanical
properties, making it excellent choice for processors demanding high strength tapes . The
grade is well accepted in the market in manufacturing of woven sacks for fertilizer, sugar,
food grains, chemicals packaging etc.
Injection moulding : G-lene Injection Molding grades are available in both UV stabilized
and Non UV stabilized versions. The grades have an excellent processability. These are
widely used in Industrial crates, vegetable crates, milk crates, soft drink crates, and
household articles.
Film : G-lene film grades are tailor made with various additive packages to meet the
packaging requirements of various end use sectors. The grades have excellent
toughness and tensile strength in its class (butene) .Its low gel count and pinholes,
excellent optical properties and sealing characteristics makes it excellent choice for
consumers in Industrial packaging /liquid packaging .
Rotomoulding : G-lene rotomolding grade has an optimum balance of process ability,
stiffness and impact strength. The grade finds application in water tanks, chemical tanks,
& toys.
Extrusion coating/Lamination : G-lene extrusion lamination grade has an processability
and drawdown ability. The grade is widely used by raffia processors in lamination of
woven fabric and tarpaulin.
Pipe coating : G-lene pipe coating grade is designed for coating on steel pipes for
transportation of oil and natural gas. The grade has excellent processability, ESCR,
abrasion resistance, and adhesion characteristics.
Wire and cable : G-lene wire and cable grades are designed for poly Jelly filled cables as
per DOT specification. The grades have an excellent processability, thermal resistance and
electrical properties.
G-lene range of HDPE and LLDPE grades are based on the 'Sclairtech' solution process
technology of NOVA Chemicals, Canada. Customers can achieve better profitability,
through process and material efficiencies, by using these grades.
HDPE Raffia grade has excellent process ability and superior mechanical properties,
making it ideal for high strength tapes.
Blow molding grades have excellent stiffness and impact properties, making them perfect
for a number of applications in the lube oil, edible oil, cosmetics & detergent
sectors.
LLDPE grades are designed with various additive packages to suit the stringent
packaging norms of various end use sectors. They are used for heavy duty & liquid
packaging applications where good physical properties are desired.
Injection moulding grades are available in both UV stabilized and Non UV stabilized

versions. These are widely used in soft drink crates, luggage shells, industrial
moulding, and household articles.
Rotomoulding grade is designed to balance stiffness and impact strength. The grade has
superior process ability, and finds applications in chemical tanks, water tanks, automotive
components & toys.
GAIL has also introduced pipe coating HDPE grade for coating on steel pipes for
transportation of oil and natural gas. The grade has excellent
processability, abrasion resistance, and adhesion characteristics.
Price
• Import Parity Pricing is followed at GAIL. This is done due to several
reasons, the primary reason being its dominant position in the petrochemical
market.
The Fundamentals of Import Parity Pricing
Import Parity Price of a product means the price that the same product would
have attracted had that been imported. The major constituents of
the Import Parity Price are:
FOB Price Landed Cost/Import Parity
Price/Refinery Transfer
Price/Refinery Gate Price/Ex-
Refinery Price
+Premium
+Ocean Freight
+Insurance
+Custom Duty
+Ocean Loss
+Wharfage
Landed Cost Ex-Storage Point Price
+Marketing Cost

+Marketing Margins
+Freight Equalization
+Stock Loss
+Working Capital
• There are two sources to the petrochemical prices:
1. Platts Report (revised every Wednesday)
2. ICIS – London Oil Report (revised every Friday)
• Along with these prices the other charges such as Octroi, sales tax,
excise, freight charges are added wherever applicable.
• The pricing also depends upon the petrochemical Demand and
Supply scenario.
Below is the product price report of both G-lex and G-lene (sample report).
Both basic price and freight charges are charged in accordance to the location. This
price report is effective from the 13
th
of June, 2008.
PRODUCT PRICE – REPORT
Location Product Product Name
Effectiv
e Currenc
Basic
Price Freight
BANGALO B52A003A B52A003A G-LEX 01/10/201 INR 69,940. 3,347.0
BANGALO B52A003AS B52A003AS G-LEX 01/10/201 INR 69,440. 3,347.0
BANGALO B52A003B B52A003B G-LEX 01/10/201 INR 69,440. 3,347.0
BANGALO B52A003BS B52A003BS G-LEX 01/10/201 INR 68,940. 3,347.0
BANGALO B52A003NA
B52A003NA G-
LEX HDPE-2 01/10/201 INR 69,940. 3,347.0
BANGALO B52A003NB
B52A003NB G-
LEX HDPE-2 01/10/201 INR 69,440. 3,347.0
BANGALO B52A003NOG
B52A003NOGG-
LEX HDPE-2 01/10/201 INR 65,940. 3,347.0
BANGALO B52A003OG
B52A003OG G-
LEX HDPE 01/10/201 INR 66,940. 3,347.0
BANGALO B52A003OGS
B52A003OGS G-
LEX HDPE 01/10/201 INR 66,440. 3,347.0
BANGALO B55HM0003A
B55HM0003A G-
LEX HDPE 01/10/201 INR 74,580. 3,347.0
BANGALO B55HM0003A
B55HM0003AS G-
LEX HDPE 01/10/201 INR 74,080. 3,347.0
BANGALO B55HM0003B
B55HM0003B G-
LEX 01/10/201 INR 74,080. 3,347.0
BANGALO B55HM0003B
B55HM0003BS G-
LEX 01/10/201 INR 73,580. 3,347.0
BANGALO B55HM0003N
B55HM0003NA G-
LEX 01/10/201 INR 74,580. 3,347.0
BANGALO B55HM0003N
B55HM0003NA G-
LEX HDPE-2 01/10/201 INR 74,080. 3,347.0
BANGALO B55HM0003N
B55HM0003NA G-
LEX HDPE-2 01/10/201 INR 71,580. 3,347.0
BANGALO B55HM0003O
B55HM0003OG G-
LEX HDPE 01/10/201 INR 71,580. 3,347.0

BANGALO B55HM0003O
B55HM0003OGS G-
LEX HDPE 01/10/201 INR 71,080. 3,347.0
BANGALO B63A003A B63A003A G-LEX 01/10/201 INR 69,940. 3,347.0
BANGALO B63A003AS B63A003AS G-LEX 01/10/201 INR 69,440. 3,347.0
BANGALO B63A003B B63A003B G-LEX 01/10/201 INR 69,440. 3,347.0
BANGALO B63A003BS B63A003BS G-LEX 01/10/201 INR 68,940. 3,347.0
BANGALO B63A003NA
B63A003NA G-
LEX HDPE-2 01/10/201 INR 69,940. 3,347.0
BANGALO B63A003NB
B63A003NB G-
LEX HDPE-2 01/10/201 INR 69,440. 3,347.0
BANGALO B63A003NOG
B63A003NOG G-
LEX HDPE-2 01/10/201 INR 66,940. 3,347.0
BANGALO B63A003OG B63A003OG G-LEX 01/10/201 INR 66,940. 3,347.0
HDPE
BANGALO B63A003OGS
B63A003OGS G-
LEX HDPE 01/10/201 INR 66,440. 3,347.0
BANGALO C43D006A
C43D006A G-
LENE HDPE 01/10/201 INR 73,470. 3,347.0
BANGALO C43D006AS
C43D006AS G-
LENE HDPE 01/10/201 INR 72,970. 3,347.0
BANGALO C43D006B C43D006B G-LENE 01/10/201 INR 68,530. 3,347.0
BANGALO C43D006BS
C43D006BS G-
LENE HDPE 01/10/201 INR 68,030. 3,347.0
BANGALO C43D006OG
C43D006OG G-
LENE HDPE 01/10/201 INR 70,470. 3,347.0
BANGALO C43D006OGS
C43D006OGS G-
LENE 01/10/201 INR 69,970. 3,347.0
BANGALO E20AN009A
E20AN009A G-LENE
LLDPE 01/10/201 INR 68,000. 3,347.0
BANGALO E20AN009AS
E20AN009AS G-
LENE LLDPE 01/10/201 INR 67,500. 3,347.0
BANGALO E20AN009B
E20AN009B G-
LENE LLDPE 01/10/201 INR 67,500. 3,347.0
BANGALO E20AN009BS
E20AN009BS G-
LENE LLDPE 01/10/201 INR 67,000. 3,347.0
BANGALO E20AN009OG
E20AN009OG G-
LENE LLDPE 01/10/201 INR 65,000. 3,347.0
BANGALO E20AN009OG
E20AN009OGS G-
LENE LLDPE 01/10/201 INR 64,500. 3,347.0
BANGALO E36A060A
E36A060A G-
LENE LLDPE 01/10/201 INR 70,030. 3,347.0
BANGALO E36A060AS
E36A060AS G-
LENE LLDPE 01/10/201 INR 69,530. 3,347.0
BANGALO E36A060B
E36A060B G-
LENE LLDPE 01/10/201 INR 69,530. 3,347.0
BANGALO E36A060BS
E36A060BS G-LENE
LLDPE 01/10/201 INR 69,030. 3,347.0
BANGALO E36A060OG
E36A060OG G-LENE
LLDPE 01/10/201 INR 65,530. 3,347.0
BANGALO E36A060OGS
E36A060OGS G-
LENE LLDPE 01/10/201 INR 65,030. 3,347.0
BANGALO E45A003A E45A003A G-LENE 01/10/201 INR 69,030. 3,347.0
BANGALO E45A003AS
E45A003AS G-
LENE HDPE 01/10/201 INR 68,530. 3,347.0
BANGALO E45A003B E45A003B G-LENE 01/10/201 INR 68,530. 3,347.0

BANGALO E45A003BS
E45A003BS G-
LENE HDPE 01/10/201 INR 68,030. 3,347.0
BANGALO E45A003OG
E45A003OG G-
LENE HDPE 01/10/201 INR 66,030. 3,347.0
BANGALO E45A003OGS E45A003OGS G- 01/10/201 INR 65,530. 3,347.0
HDPE
BANGALO E52A003A E52A003A G-LEX 01/10/201 INR 71,160. 3,347.0
BANGALO E52A003AS E52A003AS G-LEX 01/10/201 INR 70,660. 3,347.0
BANGALO E52A003B E52A003B G-LEX 01/10/201 INR 70,660. 3,347.0
BANGALO E52A003BS E52A003BS G-LEX 01/10/201 INR 70,160. 3,347.0
BANGALO E52A003NA
E52A003NA G-
LEX HDPE-2 01/10/201 INR 71,160. 3,347.0
BANGALO E52A003NB
E52A003NB G-
LEX HDPE-2 01/10/201 INR 70,660. 3,347.0
BANGALO E52A003NOG
E52A003NOG G-
LEX HDPE-2 01/10/201 INR 66,660. 3,347.0
BANGALO E52A003OG
E52A003OG G-
LEX HDPE 01/10/201 INR 68,160. 3,347.0
BANGALO E52A003OGS
E52A003OGS G-
LEX HDPE 01/10/201 INR 67,660. 3,347.0
BANGALO E52U003A E52U003A G-LEX 01/10/201 INR 74,940. 3,347.0
BANGALO E52U003AS E52U003AS G-LEX 01/10/201 INR 74,440. 3,347.0
BANGALO E52U003B E52U003B G-LEX 01/10/201 INR 74,440. 3,347.0
BANGALO E52U003BS E52U003BS G-LEX 01/10/201 INR 73,940. 3,347.0
BANGALO E52U003NA
E52U003NA G-
LEX HDPE-2 01/10/201 INR 74,940. 3,347.0
BANGALO E52U003NB
E52U003NB G-
LEX HDPE-2 01/10/201 INR 74,440. 3,347.0
BANGALO E52U003NOG
E52U003NOG G-
LEX HDPE-2 01/10/201 INR 69,940. 3,347.0
BANGALO E52U003OG
E52U003OG G-
LEX HDPE 01/10/201 INR 69,940. 3,347.0
BANGALO E52U003OGS
E52U003OGS G-
LEX HDPE 01/10/201 INR 69,440. 3,347.0
BANGALO F20S009A
F20S009A G-LENE
LLDPE 01/10/201 INR 68,000. 3,347.0
BANGALO F20S009AS
F20S009AS G-LENE
LLDPE 01/10/201 INR 67,500. 3,347.0
BANGALO F20S009B
F20S009B G-
LENE LLDPE 01/10/201 INR 67,500. 3,347.0
BANGALO F20S009BS
F20S009BS G-
LENE LLDPE 01/10/201 INR 67,000. 3,347.0
BANGALO F20S009OG
F20S009OG G-
LENE LLDPE 01/10/201 INR 65,000. 3,347.0
BANGALO F20S009OGS
F20S009OGS G-
LENE LLDPE 01/10/201 INR 64,500. 3,347.0
BANGALO F55HM0003A
F55HM0003A G-
LEX HDPE 01/10/201 INR 71,130. 3,347.0
BANGALO F55HM0003A
F55HM0003AS G-
LEX HDPE 01/10/201 INR 70,630. 3,347.0
BANGALO F55HM0003B
F55HM0003B G-
LEX HDPE 01/10/201 INR 70,630. 3,347.0

BANGALO F55HM0003B
F55HM0003BS G-
LEX HDPE 01/10/201 INR 70,130. 3,347.0
BANGALO F55HM0003N
F55HM0003NA G-
LEX HDPE-2 01/10/201 INR 71,130. 3,347.0
BANGALO F55HM0003N
F55HM0003NB G-
LEX HDPE-2 01/10/201 INR 70,630. 3,347.0
BANGALO F55HM0003N
F55HM0003NOG G-
LEX 01/10/201 INR 66,630. 3,347.0
BANGALO F55HM0003O
F55HM0003OG G-
LEX 01/10/201 INR 68,130. 3,347.0
BANGALO F55HM0003O
F55HM0003OGS G-
LEX 01/10/201 INR 67,630. 3,347.0
BANGALO I50A180A I50A180A G-LENE 01/10/201 INR 70,000. 3,347.0
BANGALO I50A180AS
I50A180AS G-
LENE HDPE 01/10/201 INR 69,500. 3,347.0
BANGALO I50A180B I50A180B G-LENE 01/10/201 INR 69,500. 3,347.0
BANGALO I50A180BS
I50A180BS G-
LENE HDPE 01/10/201 INR 69,000. 3,347.0
BANGALO I50A180OG
I50A180OG G-
LENE HDPE 01/10/201 INR 67,000. 3,347.0
BANGALO I50A180OGS
I50A180OGS G-
LENE HDPE 01/10/201 INR 66,500. 3,347.0
BANGALO I50A250B I50A250B G-LENE 01/10/201 INR 69,100. 3,347.0
BANGALO I50A250OG
I50A250OG G-
LENE HDPE 01/10/201 INR 66,600. 3,347.0
BANGALO I60A080AS
I60A080AS G-
LENE HDPE 01/10/201 INR 70,660. 3,347.0
BANGALO I60A080B
I60A080AB G-
LENE HDPE 01/10/201 INR 70,660. 3,347.0
BANGALO I60A080BS
I60A080BS G-
LENE HDPE 01/10/201 INR 70,160. 3,347.0
BANGALO I60A080OG
I60A080OG G-
LENE HDPE 01/10/201 INR 65,160. 3,347.0
BANGALO I60A080OGS
I60A080OGS G-
LENE HDPE 01/10/201 INR 64,660. 3,347.0
BANGALO I60U080A I60U080A G-LENE 01/10/201 INR 72,690. 3,347.0
BANGALO I60U080AS
I60U080AS G-
LENE HDPE 01/10/201 INR 72,190. 3,347.0
BANGALO I60U080B I60U080B G-LENE 01/10/201 INR 72,190. 3,347.0
BANGALO I60U080BS
I60U080BS G-
LENE HDPE 01/10/201 INR 71,690. 3,347.0
BANGALO I60U080OG
I60U080OG G-LENE
HDPE 01/10/201 INR 65,690. 3,347.0
BANGALO I60U080OGS
I60U080OGS G-
LENE 01/10/201 INR 65,190. 3,347.0

BANGALO I68A070NA
I68A070NA G-
LEX HDPE-2 01/10/201 INR 71,160. 3,347.0
BANGALO I68A070NB
I68A070NB G-
LEX HDPE-2 01/10/201 INR 70,660. 3,347.0
BANGALO I68A070NOG
I68A070NOG G-
LEX HDPE-2 01/10/201 INR 65,660. 3,347.0
BANGALO P41A004A P41A004A G-LENE 01/10/201 INR 68,140. 3,347.0
BANGALO P41A004AS
P41A004AS G-
LENE HDPE 01/10/201 INR 67,640. 3,347.0
BANGALO P41A004B P41A004B G-LENE 01/10/201 INR 67,640. 3,347.0
BANGALO P41A004BS
P41A004BS G-
LENE HDPE 01/10/201 INR 67,140. 3,347.0
BANGALO P41A004OG
P41A004OG G-LENE
HDPE 01/10/201 INR 65,140. 3,347.0
BANGALO P41A004OGS
P41A004OGS G-
LENE 01/10/201 INR 64,640. 3,347.0
BANGALO P52A003A P52A003A G-LEX 01/10/201 INR 76,840. 3,347.0
BANGALO P52A003B P52A003B G-LEX 01/10/201 INR 76,340. 3,347.0
BANGALO P52A003NA
P52A003NA G-LEX
HDPE-2 01/10/201 INR 76,840. 3,347.0
BANGALO P52A003NB
P52A003NB G-LEX
HDPE-2 01/10/201 INR 76,340. 3,347.0
BANGALO P52A003NOG
P52A003NOG G-
LEX HDPE-2 01/10/201 INR 73,840. 3,347.0
BANGALO P52A003OG
P52A003OG G-
LEX HDPE 01/10/201 INR 73,840. 3,347.0
BANGALO P54A001A P54A001A G-LEX 01/10/201 INR 75,840. 3,347.0
BANGALO P54A001AS P54A001AS G-LEX 01/10/201 INR 75,340. 3,347.0
BANGALO P54A001B P54A001B G-LEX 01/10/201 INR 75,340. 3,347.0
BANGALO P54A001BS P54A001BS G-LEX 01/10/201 INR 74,840. 3,347.0
BANGALO P54A001NA
P54A001NA G-LEX
HDPE-2 01/10/201 INR 75,840. 3,347.0
BANGALO P54A001NB
P54A001NB G-
LEX HDPE-2 01/10/201 INR 75,340. 3,347.0
BANGALO P54A001NOG
P54A001NOG G-
LEX HDPE-2 01/10/201 INR 72,840. 3,347.0
BANGALO P54A001OG
P54A001OG G-
LEX HDPE 01/10/201 INR 72,840. 3,347.0
BANGALO P54A001OGS
P54A001OGS G-
LEX HDPE 01/10/201 INR 72,340. 3,347.0
BANGALO PB48A004A
PB48A004A G-
LENE HDPE 01/10/201 INR 77,140. 3,347.0
BANGALO PB48A004AS
PB48A004AS G-
LENE HDPE 01/10/201 INR 76,640. 3,347.0
BANGALO PB48A004B
PB48A004B G-
LENE HDPE 01/10/201 INR 76,640. 3,347.0
BANGALO PB48A004BS PB48A004BS G- 01/10/201 INR 76,140. 3,347.0
HDPE
BANGALO PB48A004OG
PB48A004OG G-
LENE HDPE 01/10/201 INR 74,140. 3,347.0

BANGALO PB48A004OG
PB48A004OGS G-
LENE HDPE 01/10/201 INR 73,640. 3,347.0
BANGALO R35A042A
R35A042A G-
LENE LLDPE 01/10/201 INR 69,730. 3,347.0
BANGALO R35A042AS
R35A042AS G-
LENE LLDPE 01/10/201 INR 69,230. 3,347.0
BANGALO R35A042B
R35A042B G-LENE
LLDPE 01/10/201 INR 69,230. 3,347.0
BANGALO R35A042BS
R35A042BS G-LENE
LLDPE 01/10/201 INR 68,730. 3,347.0
BANGALO R35A042OG
R35A042OG G-
LENE LLDPE 01/10/201 INR 66,730. 3,347.0
BANGALO R35A042OGS
R35A042OGS G-
LENE LLDPE 01/10/201 INR 66,230. 3,347.0
BANGALO R35U042A
R35U042A G-
LENE LLDPE 01/10/201 INR 71,090. 3,347.0
BANGALO R35U042AS
R35U042AS G-
LENE LLDPE 01/10/201 INR 70,590. 3,347.0
BANGALO R35U042B
R35U042B G-
LENE LLDPE 01/10/201 INR 70,590. 3,347.0
BANGALO R35U042BS
R35U042BS G-
LENE LLDPE 01/10/201 INR 70,090. 3,347.0
BANGALO R35U042OG
R35U042OG G-
LENE LLDPE 01/10/201 INR 68,090. 3,347.0
BANGALO R35U042OGS
R35U042OGS G-
LENE LLDPE 01/10/201 INR 67,590. 3,347.0
BANGALO S56A010A S56A010A G-LENE 01/10/201 INR 64,280. 3,347.0
BANGALO S56A010AS
S56A010AS G-
LENE HDPE 01/10/201 INR 63,780. 3,347.0
BANGALO S56A010B S56A010B G-LENE 01/10/201 INR 63,780. 3,347.0
BANGALO S56A010BS
S56A010BS G-LENE
HDPE 01/10/201 INR 63,280. 3,347.0
BANGALO S56A010OG
S56A010OG G-LENE
HDPE 01/10/201 INR 59,780. 3,347.0
BANGALO S56A010OGS
S56A010OGS G-
LENE HDPE 01/10/201 INR 59,280. 3,347.0
BANGALO W50A009A
W50A009A G-
LENE HDPE 01/10/201 INR 77,280. 3,347.0
BANGALO W50A009AS
W50A009AS G-
LENE HDPE 01/10/201 INR 76,780. 3,347.0
BANGALO W50A009B
W50A009B G-
LENE HDPE 01/10/201 INR 76,780. 3,347.0
BANGALO W50A009BS
W50A009BS G-
LENE HDPE 01/10/201 INR 76,280. 3,347.0
BANGALO W50A009OG
W50A009OG G-
LENE HDPE 01/10/201 INR 69,780. 3,347.0
BANGALO W50A009OGS
W50A009OGS G-
LENE HDPE 01/10/201 INR 69,280. 3,347.0
BANGALO W52A009A W52A009A G-LEX 01/10/201 INR 74,280. 3,347.0
BANGALO W52A009AS
W52A009AS G-
LEX HDPE 01/10/201 INR 73,780. 3,347.0

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