GAIL (India) is the country's largest natural gas company with annual revenue of around Rs 17,000 crore and market capitalisation (m-cap ) of around Rs 35,600 crore. The company owns and operates the largest natural gas pipeline network in India and handles over 75% of the total gas transported in the country.
GAIL is investing heavily to lay more pipelines to widen its reach, and will be a major beneficiary of the likely jump in domestic production of natural gas. Gas production in India is likely to double in the next couple of years, which may boost GAIL¡¯
s gas transportation business. Investors can take exposure in GAIL with a two-year horizon.
Business:
Currently, GAIL operates in all segments of the natural gas value chain ¡ª from processing, transporting and marketing, to producing downstream petrochemicals using natural gas as feedstock. With a 6,800-km-long pipeline network, GAIL continues to remain the largest natural gas transporter in India.
In order to achieve backward integration, the company has invested in 29 exploration blocks and three coal bed methane (CBM) blocks. It recovers LPG from its seven natural gas treating plants and sells to oil marketing companies.
GAIL has also invested in companies which cover other aspects of the natural gas business, such as liquefied natural gas (LNG), city gas distribution (CGD) and gas-based power projects. It has set up joint ventures in Russia, Egypt and China to market natural gas. The company has embarked on an ambitious expansion plan to invest nearly Rs 29,000 crore over the next five years to augment its gas pipeline network, exploration & production (E&P ) activities, petrochemicals, city gas projects and LNG, among others.
The completion of GAIL¡¯s capital expenditure (capex) programme, will help double its natural gas transmission capacity, extend retail gas sales to 200 cities, expand its LNG terminals and increase its petrochemicals capacity by 60%.
Growth drivers:
The company's gains will accrue incrementally as the availability of natural gas improves in India. Within the next two years, the total domestic natural gas production is likely to double to 160 million cubic metres per day (mcmd) from the current 81 mcmd. The availability of natural gas is likely to further shoot up to 285 mcmd by ¡¯12.
Currently, the central government plans to bring the gas produced by the Panna, Mukta and Tapti consortium to GAIL for marketing from April ¡¯08. This will boost the company¡¯s revenues. Similarly, natural gas production from Reliance Industries¡¯ Krishna Godavari (KG) basin oilfields is likely to start by mid- ¡¯08.
GAIL has already entered into a memorandum of understanding (MoU) with Reliance Industries (RIL) for transporting its gas. Moreover, GAIL holds a stake in five E&P blocks, which have recently struck gas and are under development.
AddFavorite 
-
+