GAIL (India) Share Price

GAIL (India) Limited

GAIL (India) Limited is the largest state-owned natural gas processing and distribution company in India. With a diversified business portfolio, GAIL has significant stakes in natural gas sourcing and trading, production of LPG, liquid hydrocarbons and petrochemicals, and transmission of natural gas and LPG through pipelines. GAIL has also ventured into oil and gas blocks in India and overseas, contributing to its global standing. As of March 31, 2023, the Government of India holds a 51.52% stake in the company's paid-up equity capital.

Incorporated on August 16, 1984, as Gas Authority of India Ltd., GAIL was originally established as a public limited company, with all shares initially held by the Government of India. Since its inception, GAIL has grown tremendously, both in its pipeline infrastructure and its business operations, making it a crucial player in India's energy sector.

Early Years: From Gas Transmission to Infrastructure Development

GAIL initially began as a gas transmission company focused on building a network of natural gas pipelines across India. The company’s first project was the construction of an onshore pipeline from Hazira on the West Coast to supply natural gas to facilities in the states of Gujarat, Rajasthan, Madhya Pradesh, and Uttar Pradesh. This project, known as the Hazira-Vijaipur-Jagdishpur (HVJ) pipeline, was initiated in 1986 and completed in 1988, covering a length of 7,850 kilometres. This impressive infrastructure laid the foundation for GAIL's future growth in the natural gas sector.

In 1991, GAIL expanded its operations by constructing its first LPG plant in Vijaipur. The following year, it took over several regional pipelines from the Oil and Natural Gas Corporation (ONGC) and completed its second LPG plant at Vijaipur. By 1993, GAIL had finished constructing its third LPG plant at Vaghodia, further enhancing its production capabilities.

Expanding Operations and Joint Ventures

In 1995, the Government of India began divesting its stake in GAIL, selling 28.5 million equity shares, or 3.4% of the company’s equity capital, to domestic and qualified foreign investors. This marked the beginning of GAIL’s evolution from a fully government-owned entity to a publicly traded company.

In May 1995, GAIL formed Mahanagar Gas Ltd as a joint venture with British Gas and the Government of Maharashtra. GAIL held 49.75% of the equity shares, while British Gas and the Government of Maharashtra held the remaining shares. This joint venture was instrumental in expanding GAIL’s city gas distribution (CGD) business.

In 1998, GAIL completed two additional LPG plants at Usar and Lakwa, further increasing its production capacity. During the same year, the company formed Petronet LNG Limited (PLL), in which it holds a 12.5% equity interest. The formation of PLL enabled GAIL to play a pivotal role in importing liquefied natural gas (LNG) to India, diversifying its natural gas sourcing.

By the end of 1998, GAIL had completed significant upgrades to its HVJ pipeline, including enhancements to compressors and terminals, ensuring the pipeline’s continued efficiency and reliability. In December 1998, GAIL formed Indraprastha Gas Ltd (IGL), a joint venture with Bharat Petroleum Corporation Ltd (BPCL), for the purpose of distributing natural gas in Delhi. GAIL holds 22.5% of the equity shares in IGL.

Expansion into Petrochemicals and Strategic Acquisitions

In 1999, GAIL commissioned its petrochemical complex at Pata, marking its foray into the petrochemicals sector. The same year, the company purchased 2.5% of the Government’s equity interest in ONGC, representing 34.3 million shares, for a total of ₹5.6 billion. This strategic investment strengthened GAIL’s position in the oil and gas sector.

In 2002, GAIL underwent a significant transformation when it changed its name from Gas Authority of India Ltd to GAIL (India) Ltd. This name change reflected the company's diversified portfolio and its expansion beyond gas transmission to include a broader range of energy-related activities.

In 2003, GAIL completed the Vizag-Secunderabad LPG pipeline, further enhancing its LPG transportation capabilities. That same year, the company formed Bhagyanagar Gas Ltd, a joint venture with Hindustan Petroleum Corporation Ltd (HPCL), in which GAIL holds a 25% equity stake.

International Ventures and Focus on City Gas Distribution

In the mid-2000s, GAIL began expanding its presence not just within India but also internationally. In 2004-05, GAIL established a wholly owned subsidiary, GAIL Global Singapore Pte Ltd, to manage its international ventures. The company also acquired a 15% equity stake in NatGas Egypt, marking its entry into the international natural gas market.

In subsequent years, GAIL signed important agreements with several international players. In 2007, it signed a memorandum of understanding (MoU) with Arrow Energy of Australia and the Infrastructure Group of Sweden to explore coal bed methane opportunities in India, Australia, and other countries. These partnerships aligned with GAIL’s strategy of diversifying its gas sourcing and exploring new business opportunities.

Meanwhile, GAIL continued to strengthen its domestic operations, particularly in the city gas distribution sector. In 2008, the company launched its City Gas Distribution (CGD) projects in Pune, Noida, Greater Noida, Gurgaon, and Faridabad, contributing to the rapid expansion of piped natural gas (PNG) and compressed natural gas (CNG) distribution in these cities.

Major Infrastructure Projects and Renewable Energy Initiatives

In the late 2000s and early 2010s, GAIL undertook several large-scale infrastructure projects aimed at expanding its natural gas pipeline network. In 2009-10, GAIL completed various pipelines, including the Dadri-Bawana and Chainsa-Sultanpur pipelines, which facilitated the supply of natural gas to multiple customers across India.

In March 2010, GAIL ventured into the renewable energy sector by commissioning a 4.5 MW wind energy project in Gujarat, a significant step towards diversifying its energy portfolio.

By 2011, GAIL had further expanded its pipeline network, completing over 700 kilometers of pipelines, including the Vijaipur-Dadri and Sultanpur-Neemrana pipelines. The company also commenced the construction of the Karanpur-Moradabad-Kashipur-Rudrapur Natural Gas Pipeline, which would further enhance gas supplies in northern India.

International Expansion and Strategic Partnerships

In 2012, GAIL strengthened its international presence by incorporating GAIL Global (USA) Inc. This subsidiary acquired a 20% working interest in the Eagle Ford Shale assets held by Carrizo Oil and Gas Inc. in the United States, marking GAIL’s entry into the shale gas sector.

GAIL also signed important agreements during this period. In 2012, GAIL signed a Gas Sales Purchase Agreement (GSPA) to import gas from Turkmenistan, which would be transported through the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline. This agreement highlighted GAIL’s commitment to securing reliable long-term gas supplies for India.

Advancing Infrastructure and City Gas Distribution

In recent years, GAIL has continued to expand its infrastructure and city gas distribution projects. The Jagdishpur-Haldia and Bokaro-Dhamra Pipeline (JHBDPL), also known as the Pradhan Mantri Urja Ganga Pipeline Project, has been a cornerstone of GAIL’s efforts to supply natural gas to eastern India. By 2023, GAIL had commissioned over 2,000 kilometers of this pipeline, with the remaining sections under construction.

In 2017, GAIL launched its City Gas Distribution projects in Bhubaneswar and Cuttack in Odisha, further expanding its reach in the eastern part of India. The company also laid the foundation for several major pipeline projects, including the Dobhi-Durgapur pipeline, which is crucial for supplying natural gas to industrial hubs in eastern India.

Recent Developments and Future Outlook

In recent years, GAIL has continued to make significant progress in expanding its pipeline network and diversifying its operations. In 2022-23, GAIL commissioned 1,074 kilometres of natural gas pipelines, bringing the total length of the JHBDPL to over 2,096 kilometres. The company also commissioned several key sections of the Sultanpur-Jhajjar-Hisar Pipeline and the Barauni-Guwahati Pipeline, further enhancing gas supply to northern and eastern India.

GAIL has also ventured into renewable energy and petrochemicals. The company is setting up a 500 KTA Propane Dehydrogenation and Polypropylene (PDH-PP) Project in Usar, Maharashtra, and a 60 KTA Polypropylene project in Pata, Uttar Pradesh. These projects are part of GAIL’s strategy to diversify its product portfolio and reduce its reliance on natural gas transmission.

Outlook Overview

GAIL (India) Limited has come a long way since its inception in 1984. From a gas transmission company, it has grown into a diversified energy giant with interests in natural gas, LPG, petrochemicals, and renewable energy. With a vast network of pipelines and strategic partnerships both in India and abroad, GAIL continues to play a crucial role in India’s energy security. As the energy landscape evolves, GAIL is well-positioned to adapt to new challenges and opportunities, ensuring its continued growth and success in the years to come.