Focused Energy Report –

XXIX

Monthly Report – September 2014

Energy Desk

GAIL (India) Ltd.

1

Table of Contents

Energy Prices 3 I.

Under-Recoveries on Petroleum Products 3 II.

Country Analysis - Brunei 4 III.

A. Resources ................................................................................................................................................................................................ 4

B. Oil & Gas ................................................................................................................................................................................................. 5

C. Analysis Note ........................................................................................................................................................................................ 5

Company Analysis - PetroChina 6 IV.

A. Business Segment of the Company ............................................................................................................................................. 6

B. Market Position .................................................................................................................................................................................... 6

C. SWOT Analysis ...................................................................................................................................................................................... 7

D. Company’s Strategy ............................................................................................................................................................................ 7

E. Financial Analysis ................................................................................................................................................................................. 8

F. Analysis Note ........................................................................................................................................................................................ 8

INCOTERMS 9 V.

A. INCOTERMS are grouped into Two Classes .............................................................................................................................. 9

1. Terms for any Transport Mode .............................................................................................................................................. 10

2. Maritime-only terms .................................................................................................................................................................. 10

B. INCOTERM Chart .............................................................................................................................................................................. 11

C. Analysis Note ..................................................................................................................................................................................... 11

Comparative Analysis of Diesel vs. CNG & NG vs. liquid Fuels 12 VI.

A. Diesel ..................................................................................................................................................................................................... 12

B. CNG ........................................................................................................................................................................................................ 12

C. Analysis ................................................................................................................................................................................................. 12

D. Cost advantage in using Natural gas than liquid fuels ...................................................................................................... 13

2

Executive Summary

The Focused Energy Report for the month of September2014 reviews the Energy Prices taking

in consideration the comparison with last month. There’s decrease of around 2.3 % in the WTI

oil prices, the prices of natural gas Henry Hub have increased by 5.65 % and around 2.74 %

decrease is there for crude oil prices of Brent.

Normalcy is not seen in comparison with last month, for the case of Natural gas which has risen

after a gap of 3 months.

The next discussion in the report is about “Brunei”.

Brunei is the largest net exporter of total oil liquids in the Asia-Pacific region. It seems to be a

promising country in terms of oil and gas resources. Though being small in size it has sizeable

amount of world’s share of hydrocarbon resources.

In the next section an “Analysis of Company- PetroChina,” the publicly listed arm of state-run

China National Petroleum Corporation (CNPC) which remains the company’s controlling

stakeholder, is being done.

Given PetroChina's large exposure to the Chinese market, changes in the Chinese economy and

politics will heavily affect its fortunes. It faces challenges to further fuel its growth in the year

ahead: higher upstream production costs from increasingly difficult projects, limited

downstream gains from slowing domestic oil demand, and risks to further growth of its Natural

Gas and Pipeline business due to the divestment of two sections of the West-East pipeline and

the discount of domestic wholesale gas price to gas imports.

In this section we discuss about “INCOTERMS”. The Incoterms rules or International

Commercial Terms are a series of pre-defined commercial terms published by the International

Chamber of Commerce (ICC).

Incoterms tend to impose a universal code, essentially representing the positions of

representative of the two trends “reforming” and “conservative”. The rules Incoterms 2010

make it possible to rigorously determine the seller's and the buyer’s responsibilities in carrying

out the operations involved by the delivery, provide a clear solution about using the term “risk

transfer” , establish the parties' obligations relating to the procurement and preparation of the

documents ensuring the delivery of goods.

In the last section there is a Comparative Analysis of Diesel vs. CNG & NG vs. liquid Fuels.

There are many fuels which are competing with natural gas for the industrial purpose. As per

the analysis based upon price, GCV and energy is being done considering the present scenario,

and is found CNG (LNG even @ 14 $/mmBTU) would be approx. 15% to 20% (may vary from

states) cheaper as compared to diesel. Further it is comparison with other fuels like Naptha, FO,

LSHS and LDO too and it is found that the usage of natural gas is advantage in terms of cost.

3

ENERGY PRICES I.

WTI Crude Oil ($/barrel) BRENT Crude Oil ($/barrel) Natural Gas ($/mmbtu)

Average International FOB Price & Exchange rate:

UNDER-RECOVERIES ON PETROLEUM PRODUCTS II.

(A) Product-wise Under-recovery of Public Sector Oil Marketing Companies(OMCs):

*additionally, a subsidy of Rs 0.82/Litre on PDS kerosene & Rs 22.58/Cylinder on Domestic LPG is provided by the

Government.

(B) The OMCs have reported the following under recovery during 2013-14 & of 2014-15:

Price on 1st August 2014 Price on 1

st September 2014 Change % Change

Brent crude oil 106.02 103.19 -2.83 -2.74%

WTI crude oil 98.17 95.96 -2.21 -2.30%

Henry Hub Natural Gas 3.84 4.07 0.23 5.65%

Particulars Unit 29th

August 2014 Fortnight

(17- 29-Aug-14)

Crude Oil(Indian Basket)

- In US Dollar

- In Indian Rupees

($/bbl)

(Rs/bbl)

100.97

6105.66

101.14

6115.94

Exchange Rate (Rs/$) 60.47 60.47

Product Unit Under-recovery (eff. 1st Sep 14)

Diesel (Rs/Litre) 0.08

PDS Kerosene* (Rs/litre) 32.67

Domestic LPG* (Rs/Cylinder) 427.82

Product 2013-14

(Rs/Crore) Q1 of 2014-15

(Rs/Crore)

Diesel 62,837 9,037

PDS Kerosene 30,575 7,524

Domestic LPG 46,458 12,129

4

COUNTRY ANALYSIS - BRUNEI III.

Brunei in Southeast Asia is a sovereign state located on the north coast of the island of Borneo. It

is completely surrounded by the state of Sarawak, Malaysia and its coastline is with the South

China Sea, also it is separated into two parts by the Sarawak district of Limbang.

A. Resources

Brunei is a substantial producer

and exporter of crude oil and

natural gas for Asia and relies on

hydrocarbon revenues for nearly

two-thirds of its gross domestic

product. Through its long-

standing joint venture with Royal

Dutch Shell, Brunei has produced

oil and natural gas for several

decades, primarily from two large,

mature fields - Southwest Ampa

and Champion - in the offshore

Baram Delta. After reaching a

peak of 220,000 barrels per day

(bbl/d) in 2006, Brunei´s

petroleum and other liquids

production has declined to

134,000 bbl/d in 2013.

Reserves As on 2013 Share of world’s total R/P ratio

Oil ('000 MM barrels) 1.1 0.1% 22.3

Gas (TCM) 0.3 0.2% 23.6

Brunei has an interest in

hydrocarbon development in

the South China Sea (SCS),

although it has not made any

formal claims to the hotly

contested Spratly or Paracel

Islands. However, the

country´s exclusive economic

zone includes the Louisa Reef,

an area of small islands in the

southeastern part of the

Spratly Islands. An offshore

settlement with Malaysia in

2010 allows Brunei to explore

untapped formerly disputed

deepwater areas in the Baram

Delta and issue more

production sharing contracts

to help prop up oil and

natural gas production and

offset declines from older

5

11.0

6.6

-

2.0

4.0

6.0

8.0

10.0

12.0

14.0

Mill

ion

To

nn

es

Oil & Gas Production - Brunei

Natural Gas: Production Oil Production

existing fields. In 2013, Brunei National Petroleum Company (Petroleum Brunei) and Petronas of Malaysia signed

several cooperation agreements for joint development of fields in both countries´ offshore areas.

Natural gas fuels virtually all of Brunei´s electricity generation. However, the country is seeking to diversify its

installed capacity, import electricity through a potential transmission line from Malaysia, expand renewable

generation capacity, and improve electricity efficiencies to conserve its natural gas for exports.

B. Oil & Gas

Despite the decline in production, Brunei is the largest net exporter of total oil liquids in the Asia-Pacific region

given the country´s minimal domestic consumption. In 2013, Brunei´s net exports of total liquids were about

120,000 bbl/d, primarily crude oil sent to key Asian oil consumers. Brunei plans to expand its refinery capacity, as

Chinese company Zhejiang Hengyi Group is constructing a new refinery with a capacity of 160,000 bbl/d

scheduled to come online by 2017. This new facility could shift the dynamics of the country´s oil exports in favor

of consuming more crude oil and exporting more petroleum products.

Brunei produced 426 billion cubic feet (Bcf) of dry natural gas in 2012, mostly from Southwest Ampa and other

fields associated with oil production. Although domestic gas demand has increased steadily in the past decade,

Brunei still exports on average more than three-quarters of its output.

Brunei has been a stable and long-term LNG exporter to Japan and Korea from its 5-train, 950 million cubic feet

per day Lumut LNG liquefaction plant, sending out about 336 Bcf in 2013. South Korea and Japan renewed

several of their long-term contracts in 2013 for significantly shorter terms, and Japan reduced its contracted

volumes. This drop in contracted LNG amounts has prompted Brunei LNG to sell to other regional buyers and

seek short-term contracts or spot cargo sales. Brunei LNG signed a 10-year contract with Petronas of Malaysia

starting in 2013 and began sending out spot cargoes to other Asian consumers. French-based oil company,

Total, made significant gas and condensate discoveries in Block B in 2010 which could bolster Brunei´s natural

gas reserve base and sustain its production levels and support LNG exports.

C. Analysis Note

Brunei is the largest net exporter of total oil liquids in the Asia-Pacific region given the country´s minimal

domestic consumption. Brunei seems to be a promising country in terms of oil and gas resources. Though being

small in size it has sizeable amount of world’s share of hydrocarbon resources.

6

exploration, development,

production and marketing of crude oil and natural ga

refining, transportation,

storage and marketing of crude oil and oil products

production and marketing of primary

petrochemical products, derivative chemicals and other

chemicals

transportation of natural gas, crude oil and refined oil, and marketing of natural

gas.

COMPANY ANALYSIS - PETROCHINA IV.

PetroChina is the publicly listed arm of state-run China National Petroleum Corporation (CNPC), which remains

the company's controlling stakeholder. The company was established in 2000 when it was listed on the New York

and Hong Kong exchanges, a public listing that was seen as a watershed moment not just for PetroChina, but for

China's new openness to the world. Since that listing, PetroChina has grown dramatically to become the second

largest publicly-listed oil company in the world behind Exxon. The vast majority of PetroChina's business remains

in China, where it plays a leading role as an oil and gas producer, refiner, pipeline operator and marketer.

Nevertheless, the company is increasingly focused on expanding abroad, and the next decade should see it

emerge as a true international powerhouse in the oil and gas industry.

A. Business Segment of the Company

Chinese state energy holding company CNPC holds 86.5% of principal subsidiary PetroChina, which is China's

largest producer of oil and gas, as well as the country's biggest transporter and seller of natural gas. The group is

not only one of the largest companies in China in terms of revenue, but has become one of the biggest oil

companies in the world. PetroChina is involved in the exploration for, development, production and sale of crude

oil and natural gas, as well as the refining of crude oil and petroleum products. It is also engaged in the

production and sales of basic and derivative chemical products, the marketing and trading of refined products,

the transmission of natural gas, crude oil and refined products, and the sale of natural gas.

B. Market Position

The bulk of PetroChina's oil and gas reserves are located in north-eastern, northern, south-western and north-

western China, with the majority found in the Songliao Basin in the Heilongjiang and Jilin provinces (site of the

Daqing oil region). PetroChina's domestic oil production has remained flat for years as most of its oil fields are

depleting.

The firm had few overseas assets before June 2005's USD2.5bn acquisition of half of the parent company CNPC's

foreign interests. However, PetroChina now boasts holdings in various countries including Kazakhstan, Venezuela

and Peru.

PetroChina is also a major producer of refined products and petrochemicals, and is the largest retail marketer of

oil products in China. Its refineries process almost 2.7mn b/d of crude and the company accounts for just over

39% of the domestic fuels market, with more than 19,000 service stations. It is adding 3,400 stations through the

takeover of existing outlets from parent company CNPC, establishing new ones and merging with smaller rivals.

7

C. SWOT Analysis

Strengths

Unparalleled financial resources and a licence

from the government to aggressively pursue

assets abroad

Dominant position in China's booming oil and

gas sector with strict regulations limiting

completion from foreign companies

Weaknesses

Exposure to strict fuel controls that lead to heavy refining losses in times of high international crude oil prices

Exposure to heavily regulated gas prices in China that is hitting its natural gas and pipeline distribution business

Limited technological expertise beyond conventional onshore production

Opportunities

International assets could add to as much as

50% of total production over the coming

decade

Unconventional gas exploration projects to

increase gas output in the long run

Government price reforms in the natural gas

market would be a major boost to

PetroChina's financial performance and ability

to deliver value to minority shareholders

Threats

The government has spoken of the need for gas

price reforms, but enacting them will require

significant political will

China's attempts to secure energy resources

abroad often arouses public and political

opposition, posing a potential threat to the

company's internationalisation strategy

Increasing exposure to domestic banking sector

as debt financing rises

Increasing cost of operations

D. Company’s Strategy

Owned by CNPC, PetroChina is China's second largest investor in petrochemicals and is seeking to add value to

upstream resources through downstream joint ventures (JVs). The company was due to complete construction of

its 800,000tpa naphtha cracker in Pengzhou, Sichuan, in mid-2013. However, opening was frustrated by a delay

in the commissioning the associated 200,000 barrel per day (b/d) Pengzhou refinery following an investigation

into accusations of corruption against former company officials; the refinery was due to provide the cracker with

naphtha feedstock. Downstream plants supplied by the cracker include a 600,000tpa polyethylene (PE) plant, a

300,000tpa polypropylene (PP) plant, a 350,000tpa aromatics unit and a 150,000tpa butadiene unit.

PetroChina in March 2014 flagged a drop in capital expenditure for 2014, its second consecutive annual

decline. Spending is expected to fall 7% year-on-year (y-o-y) in 2014 to CNY296.5bn, the company said in its

annual earnings statement. In 2013, capital spending fell 9.6% to CNY318.7bn, it added, the first such fall since its

debut on the Hong Kong and New York stock exchanges in 2000. PetroChina has vowed to divest more non-core

assets such as pipelines and marginal oil and gas fields to reinforce investment in large upstream projects with

the aim of boosting shareholder returns.

Construction of PetroChina subsidiary Daqing Petrochemical's new 300,000tpa high-density

polyethylene (HDPE)/linear low-density polyethylene (LLDPE) unit was completed in Q212. The plant is a

derivative unit at the producer's new naphtha cracker, which has 600,000tpa of ethylene capacity. Construction of

the cracker was completed in late 2011 and it came on stream in H212 alongside the PE unit, doubling the

company's ethylene production capacity to 1.2mn tpa. The cracker also feeds a separate 250,000tpa PE plant at

the same site, which was completed in Q411.

The focus over the medium-term will be PetroChina's USD12.6bn JV with Shell and Qatar Petroleum (QP) (51%

PetroChina, 24.5% QP and 24.5% Shell) for a complex in Taizhou, Zhejiang Province. It will include a 440,000b/d

oil refinery and 1.2mn tpa ethylene plant, utilising imported condensate as feedstock. CNPC is also planning to

build a refinery and petrochemicals complex in Guangdong Province, in partnership with Petróleos de Venezuela

(PdVSA). PdVSA is expected to supply crude oil to the complex and provide oilfield concessions to CNPC in

Venezuela in return for a share of the Chinese fuels market.

8

PetroChina completed its new refining and petrochemicals complex at Fushun in Liaoning Province in

October 2012. The complex consists of 13 large-scale main installations that were brought on stream over the

course of 2012 and 2013, including an 8mn tonne atmospheric vacuum unit and an 800,000 tonne ethylene-

producing unit. PetroChina brought the 800,000tpa ethylene plant at Fushun on stream in September 2012,

raising ethylene capacity at the complex to 950,000tpa.

Meanwhile, 2013 PetroChina subsidiary Hohhot Petrochemical began commercial production its new

150,000tpa PP unit in the Hohhotin Inner Mongolia Autonomous Region. PetroChina started construction of a

fertiliser complex in Xinjiang Province in Q412 with planned capacities of 450,000tpa ammonia and 800,000tpa

urea, utilising feedstock from the Ying Mai Li gas field, which is owned by a PetroChina subsidiary. The estimated

cost of the complex in Aksu Economic and Technological Development Zone is CNY3.4bn (USD540mn).

Completion is expected in 2015.

In September 2013, PetroChina delayed commissioning its 200,000b/d Pengzhou refinery in China's south-

western province of Sichuan following an investigation into accusations of corruption against former company

officials. Pengzhou is to be Sichuan's first major refinery and will process crude from northwest China and

Kazakhstan.

E. Financial Analysis

PetroChina's total comprehensive income for Q1 2014 continued on a year-on-year decrease, falling 13.0% from

RMB40.1bn in Q1 2013 to RMB34.9bn in Q1 2014. However, Q1 2014 actually saw an improvement in both

earnings before interest, tax, depreciation, amortization and exploration expenses (EBITDAX) and earnings before

interest, tax, depreciation and amortization (EBITDA) compared to Q1 2013.

Fiscal year is January-December. All

values HKD millions. 2009 2010 2011 2012 2013

Gross Income 343.3B 452.54B 561.73B 546.92B 556.49B

Gross Income Growth - 31.82% 24.13% -2.64% 1.75%

Net Income 117.08B 160.56B 160.15B 141.77B 163.49B

EPS (Basic) 0.64 0.87 0.88 0.77 0.90

EBITDA 273.5B 350.58B 385.09B 400.1B 411.61B

EBITDA Growth - 28.18% 9.84% 3.90% 2.88%

F. Analysis Note

PetroChina: A Tough 2014 Ahead- Given PetroChina's large exposure to the Chinese market, changes in the

Chinese economy and politics will heavily affect its fortunes. It faces challenges to profit its growth in the year

ahead: higher upstream production costs from increasingly difficult projects, limited downstream gains from

slowing domestic oil demand, and risks to further growth of its Natural Gas and Pipeline business due to the

divestment of two sections of the West-East pipeline and the discount of domestic wholesale gas price to gas

imports.

9

INCOTERMS V.

The Incoterms rules or International Commercial Terms are a series of pre-defined commercial terms published

by the International Chamber of Commerce (ICC) that are widely used in International commercial transactions or

procurement processes. They are a set of three-letter standard trade terms most commonly used in international

contracts for the sale of goods. First published in 1936, INCOTERMS provide internationally accepted definitions

and rules of interpretation for most common commercial terms.

INCOTERMS inform the sales contract by defining the respective obligations, costs and risks involved in the

delivery of goods from the Seller to the Buyer. Incoterms® rules are recognized by UNCITRAL as the global

standard for the interpretation of the most common terms in foreign trade.

Incoterms aren’t: Law – Incoterms are needed to be specified in sales contracts in order to supply. This is

normally done by citing the current Incoterms version in sales quotations and purchase orders.

A. INCOTERMS are grouped into Two Classes

The eighth published set of pre-defined terms, Incoterms 2010 defines 11 rules, reducing the 13 used in

Incoterms 2000 by introducing two new rules ("Delivered at Terminal", DAT; "Delivered at Place", DAP) that

10

replace four rules of the prior version ("Delivered at Frontier", DAF; "Delivered Ex Ship", DES; "Delivered Ex Quay",

DEQ; "Delivered Duty Unpaid", DDU).

In the prior version, the rules were divided into four categories, but the 11 pre-defined terms of Incoterms 2010

are subdivided into two categories based only on method of delivery. The larger group of seven rules applies

regardless of the method of transport, with the smaller group of four being applicable only to sales that solely

involve transportation by water.

1. Terms for any Transport Mode

1. EXW – EX WORKS (… named place of delivery)

The Seller’s only responsibility is to make the goods available at the Seller’s premises. The Buyer bears full

costs and risks of moving the goods from there to destination.

2. FCA – FREE CARRIER (… named place of delivery)

The Seller delivers the goods, cleared for export, to the carrier selected by the Buyer. The Seller loads the

goods if the carrier pickup is at the Seller’s premises. From that point, the Buyer bears the costs and risks of

moving the goods to destination.

3. CPT – CARRIAGE PAID TO (… named place of destination)

The Seller pays for moving the goods to destination. From the time the goods are transferred to the first

carrier, the Buyer bears the risks of loss or damage.

4. CIP – CARRIAGE AND INSURANCE PAID TO (… named place of destination)

The Seller pays for moving the goods to destination. From the time the goods are transferred to the first

carrier, the Buyer bears the risks of loss or damage. The Seller, however, purchases the cargo insurance.

5. DAT – DELIVERED AT TERMINAL (… named terminal at port or place of

destination)

The Seller delivers when the goods, once unloaded from the arriving means of transport, are placed at the

Buyer’s disposal at a named terminal at the named port or place of destination. “Terminal” includes any

place, whether covered or not, such as a quay, warehouse, container yard or road, rail or air cargo terminal.

The Seller bears all risks involved in bringing the goods to and unloading them at the terminal at the named

port or place of destination.

6. DAP – DELIVERED AT PLACE (… named place of destination)

The Seller delivers when the goods are placed at the Buyer’s disposal on the arriving means of transport

ready for unloading at the names place of destination. The Seller bears all risks involved in bringing the

goods to the named place.

7. DDP – DELIVERED DUTY PAID (… named place)

The Seller delivers the goods -cleared for import – to the Buyer at destination. The Seller bears all costs and

risks of moving the goods to destination, including the payment of Customs duties and taxes.

2. Maritime-only terms

1. FAS – FREE ALONGSIDE SHIP (… named port of shipment)

The Seller delivers the goods to the origin port. From that point, the Buyer bears all costs and risks of loss or

damage.

2. FOB – FREE ON BOARD (… named port of shipment)

The Seller delivers the goods on board the ship and clears the goods for export. From that point, the Buyer

bears all costs and risks of loss or damage.

11

3. CFR – COST AND FREIGHT (… named port of destination)

The Seller clears the goods for export and pays the costs of moving the goods to destination. The Buyer

bears all risks of loss or damage.

4. CIF – COST INSURANCE AND FREIGHT (… named port of destination)

The Seller clears the goods for export and pays the costs of moving the goods to the port of destination. The

Buyer bears all risks of loss or damage. The Seller, however, purchases the cargo insurance.

B. INCOTERM Chart

New regulation of transfer of costs and risks with FOB, CFR, and CIF with the FOB, CFR, and CIF clauses, the

transfer of costs and risks has been newly defined. So far, when these three rules applied, risk transfer occurred at

the ship’s rail. With Incoterms ® 2010, the risk transfer now occurs after the goods have been loaded on board

the vessel.

Incoterms 2010: Divide costs, risks and responsibilities between seller and buyer. Guide one or the other

contracting party Guide one or the other contracting party into subsidiary contracts necessary to fulfil designated

Incoterm tasks, such as contracts of carriage and insurance. Provide useful shorthand. Reduce potential

misunderstandings between buyer and seller. “Reflect” rather than dictate trade practice

The following chart is a general summary of obligations of the buyer and seller based on the 11 INOCTERMS.

Incoter

m

2010

Export-

Customs

declaratio

n

Carriag

e to

port

of

Export

Unloadin

g of truck

in port of

export

Loadin

g

charges

in port

of

export

Carriage

(Sea

Freight/A

ir Freight)

to port of

import

Unloadin

g

charges

in port of

import

Loadin

g on

truck

in port

of

import

Carriage

to

place of

destinatio

n

Insuranc

e

Import

customs

clearanc

e

Impor

t

taxes

EXW Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer

FCA Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer

FAS Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer

FOB Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer

CFR Seller Seller Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer

CIF Seller Seller Seller Seller Seller Seller Seller Buyer Seller Buyer Buyer

CPT Seller Seller Seller Seller Seller Seller Seller Seller Buyer Buyer Buyer

CIP Seller Seller Seller Seller Seller Seller Seller Seller Seller Buyer Buyer

DAT Seller Seller Seller Seller Seller Seller Seller Seller Seller Buyer Buyer

DAP Seller Seller Seller Seller Seller Seller Seller Seller Seller Buyer Buyer

DDP Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller

C. Analysis Note

Incoterms tend to impose a universal code, essentially representing the positions of representative of the two

trends “reforming” and “conservative”. The rules Incoterms 2010 make it possible to rigorously determine the

seller's and the buyer’s responsibilities in carrying out the operations involved by the delivery, provide a clear

solution about using the term “risk transfer” , establish the parties' obligations relating to the procurement and

preparation of the documents ensuring the delivery of goods.

12

COMPARATIVE ANALYSIS OF DIESEL vs. CNG & NG vs. LIQUID VI.FUELS

A. Diesel

Density of Diesel 0.85

GCV(Kcal/Kg) 10800

Table 1: Summary of Diesel - Customer Cost, Price & Energy Values

Customer Cost in (Rs/ Lt) Price in (Rs/Kg) Energy (Kcal/Rs)

45 52.94 204.00

48 56.47 191.25

50 58.82 183.60

55 64.71 166.91

60 70.59 153.00

65 76.47 141.23

70 82.35 131.14

B. CNG

Table 2: Summary of CNG - Customer Cost, Price, GCV & Energy

LNG Cost $/MMBTU Conversion

Rate(1$=RS)

CNG Price

(Rs/SCM)

GCV

(Kcal/scm) Energy(Kcal/Rs)

11 60 43.71 10000 228.76

12 60 46.57 10000 214.71

13 60 49.43 10000 202.29

14 60 52.29 10000 191.22

15 60 55.16 10000 181.31

16 60 58.02 10000 172.37

17 60 60.88 10000 164.27

18 60 63.74 10000 156.88

18.6 60 65.46 10000 152.77

19 60 66.60 10000 150.14

20 60 69.47 10000 143.96

C. Analysis

At present under recovery on Diesel is Rs 1.33/Lt.

If the imported LNG is at 14 $/mmbtu then customer CNG price in New Delhi is 52.29 Rs/SCM then in

comparison to it the corresponding diesel price should be approx. 48 Rs. /l (refer table 1 in terms of

Energy – Kcal/Rs.).

As per current situation customer end diesel price is approx. 60 Rs. /l. In this case the customer tends to

lose by not opting for CNG which at the same rate of diesel shall correspond to 18.6 $/mmBTU. (Refer

table 2 in terms of Energy – Kcal/Rs.).

13

Concluding, in the present scenario, CNG (even @ 14 $/mmBTU) would be approx. 15% to 20% (may vary from

states) cheaper as compared to diesel.

D. Cost advantage in using Natural gas than liquid fuels

There are many fuels which are competing with natural gas for the industrial purpose. Several factors, especially

changes in relative fossil fuel prices, have influenced the mix of energy sources used. Supply and relative prices

are the two main drivers determining the mix of fuels used by industry. Expansion of the natural gas pipeline

network decreased uncertainties around natural gas availability and Price of natural gas doesn’t fluctuate much.

We are comparing a comparative cost of energy between natural gas and liquid fuels.

We can see from the above table that

If natural gas price at customer end is up to 20 $/ mmbtu then natural gas is cheaper than Naphtha, FO,

LSHS & LDO at current price.

If natural gas price at customer end is between 20 $/ mmbtu - 20.5 $/ mmbtu, then natural gas is

cheaper than Naphtha, FO & LDO but costlier than FO

If natural gas price at customer end is between 20.5 $/ mmbtu- 23.9$/ mmbu then natural gas is cheaper

than Naphtha & LDO but costlier than FO & LSHS

If natural gas price at customer end is between 23.95 $/ mmbtu – 27.64 $/ mmbtu then natural gas price

is cheaper than Naphtha but costlier than FO, LSHS & LDO.

Note:

The data and information in the report is sourced from websites and documents available in public

domain and doesn’t purport to be official view of government or any organization. Sincere efforts have

been made to present correct data; however, errors and omissions, if any, are regretted and the same may

please be brought to the notice of Energy Desk for necessary corrective action.

Sl.

No. Particulars Unit

Spot

RLNG Naphtha FO LSHS LDO

1 Gross Calorific of liquid of fuel Kcal/Kg

11370.00 10200.00 10700.00 10700.00

2 Cost of liquid fuels(Basic

prices) Rs/MT

62350.00 41420.00 42640.00 50810.00

3 Cost of liquid fuels(Basic

prices+20% ED & taxes)

74820.00 49704.00 51168.00 60972.00

4 Gross Calorific value spot RLNG Kcal/SC

M 10000

5 Exchange Rate Rs/$

60

7 One ton of liquid fuel

Equivalent to MMBTU

45.12 40.48 42.46 42.46

10 Cost of Energy in $ $/MMBT

U

27.64 20.47 20.08 23.93