Reflecting the positive outlook ahead for the region, Asian gas market revenues continue to grow at a steady increase of 12% – the result is a gases market worth up to $645m and showing signs of further prospects
in future.

A greater sense of peace has spread throughout India and the wider region during the past few years, yet economic growth shows no sign of relaxing and investment in the region looks set to explode in the coming months and years. India is now said to be the second fastest growing major economy in the world after China and industrial production contributes around a fifth of India’s economic expansion. The country’s finance minister, Palaniappan Chidambaram, is quoted as having said, “…About 83% of the economy is going to grow between 9% and 10%.”

Similarly, investment in neighbouring Bangladesh could be geared-up for a rise in the near future as company’s look to exploit the potential the country affords and the falling cost of investment to be found there, as publicised by a recently conducted survey.

The survey conducted by the Japan External Trade Organisation (JETRO) reported that Bangladesh has emerged as ‘the cheapest place’ in Asia for investment, in terms of 9 cost components including legal minimum wages and charges of utility services. If opportunities to invest in the country are as optimistic as suggested, the gases market could expect to see further rises in revenues as company’s and organisations clamour to get involved.
Revenues from the industrial gas business in Bangladesh had fallen 16% to $28m in 2005, a slump that had been justified by the rough patch experienced by BOC Bangladesh from 2001-2004 and a downturn in the ship-breaking industry. This decline appears to have been arrested in 2006 however, as an increase of 7% characterises a market recovering. Revenues have now reached $30m, made up largely by the packaged gases business in the country and still headed-up by BOC Bangladesh’s leading 60% share of the market.

There are also around 8 other minor companies operating in the Bangladesh market, operating small gas plants for cylinder filling and the packaged gas business and mainly based in the Chittagong or Dhaka areas. The most notable of these Chittagong Oxygen and National Oxygen.
Bangladesh, in addition to Malaysia, Thailand and Nigeria, is also earmarked as one of the country’s to benefit from the export of additives to produce a new metal-cutting gas, more powerful than traditional acetylene gas.

Having recently celebrated 60 years of independence, the Republic of India is currently an area of change and economic development. Thought to be one of the fastest growing economies in the world, fervent activity in the Indian gas market mirrors the ongoing development of the country as a whole and the opportunities for investment afforded in a number of gases avenues.

The previously held belief that the country could become the world’s 5th or 6th largest gas market over the next 2 decades appears to be well founded as India’s market continued to show a steady growth rate in 2006, up 13% to reach gas revenues of $557m according to figures from Spiritus Consulting. This follows on from a growth increase of 12% the year before and compares favourably to the rise in the wider South Asian region.

Praxair India retains its position as the key player and number one supplier in the country, dominating a 23% market share and having also reached agreements on notable contracts in recent months.

It was revealed in September 2007 that India’s JSW Steel had selected Praxair India to meet the industrial gas requirements of the expansion of its steel plant in Vijaynagar. Increasing from 6.8 million tpy to 10 million tpy by 2010, the enhancement is consistent with JSW’s vision to grow its steel production capacity to 30 million tpy and Praxair will build a state-of-the-art 1,800 tpd air separation plant as part of the agreement.
Praxair will also be installing significant storage capacity for liquid oxygen, liquid nitrogen and liquid argon, in order to meet JSW’s requirements and feed merchant liquids to the fast growing region of Southern India too.

John Panikar, managing director of Praxair India Pvt Ltd, noted at the time of the announcement, “We are proud to have been selected by JSW for their new requirements and are committed to globally growing with and providing value to JSW.”

Indeed, on site projects like this accounted for a $164m share of the Indian market, while packaged gases accounted for the biggest revenues in the country, at a sizeable $206m.
As recently as late December 2007, it emerged that Praxair had secured another multi-year agreement in the Indian market and another on-site deal, for the supply of on-site hydrogen generators for industrial hydrogen applications within India. The deal, with HyRadix Inc, covers the certification of the HyRadix Aptus hydrogen generator, via the Praxair vendor qualification process, and the exclusive supply of the Aptus generator to Praxair in India.

Describing the agreement and the developing Indian environment, Greg Solomon, chairman of HyRadix parent company Eden Energy, commented, “We are very pleased to be working with Praxair, the leading industrial gas supplier in India, in such an exciting and rapidly growing market as India.”

Another of the major gas players, The Linde Group, is also seeing significant investment in India. In December 2007, Linde announced it is to infuse Rs 598 crore into its subsidiary BOC India to meet the bulk of the company’s fund requirements for ongoing projects in 2008. In the process the German group will consolidate its shareholding in BOC India to around 74%, from its previous share of just over 54%.

BOC India occupies the second-largest share of the Indian gases market, worth around $101m or 18% of the market, and despite recording a 40% decline in profits for Q2 2007, is focused on a number of projects as part of its growth strategy to penetrate the market in North India.

The company announced plans to set-up a merchant ASU in the State of Himachal Pradesh in September 2007. The ASU is expected to be commissioned in mid 2009. The firm’s project engineering division has been awarded 2 contracts from the Steel Authority of India Ltd (SAIL) for the set-up of 2 ASU’s, worth an estimated Rs318bn. Expected to be executed over a period of 2-3 years, the contracts were announced in October last year and involve the set-up of 2 ASU’s at SAIL’s Rourkela Steel Plant and IISCO Steel Plant.

Meanwhile, BOC India will also be supplying gases to JSW Steel for its expansion programme at its power plant in Bellary.

Exploring opportunities
In other areas of the gases spectrum opportunities are actively being explored. BG Exploration and Production India Limited (BGEPIL) owns a 30% share in the joint venture executing a pipeline project in the Tapti gas field, offshore India, where gas is gathered from the field and surrounding areas.

Cryogenic equipment manufacturer Cryolor has announced in January that it intends to strengthen and capitalise on its position in the South Asian market, with investment in a purpose built manufacturing facility near Chennai in India for the production of a wide range of cryogenic bulk tanks. Cryolor cited the abundance of skilled engineers and workers and raw materials the country is able to provide as the motivation for the project, the company also appointing a new managing director to oversee the development.

As the new managing director of Cryolor India, Ravin Mirchandani commented, “We intend to manufacture a broad range of products in India in the years to come. The new facility will be Cryolor’s lead supply facility for our customers in India, the rest of Asia and the Middle East. We are excited about the opportunities this site will offer and look forward to working even more closely with our customers in the region.”

Jean Bécourt-Foch, managing director of Cryolor S.A, enthused, “Cryolor’s investment in India proves our dedication to accompany and serve our customers world-wide. Significant investments strengthen and diversify our production capacity with a mix of resources that supports flexibility and reactivity; they will reinforce Cryolor’s position as a world-class supplier to our customers.”

Liquefied natural gas (LNG) is emerging as a viable fuel alternative across the globe and the first of many LNG technology innovations in India was embarked upon in October 2007, when state-run utility the Indian Oil Corporation (IOC) commissioned a pilot project offering ‘LNG at the doorstep’. The initiative was introduced with the technological support of Chart Industries and offers LNG at the doorstep of customers located away from natural gas pipelines, while an LNG import terminal is thought to be on the agenda near Chennai, as are city gas distribution projects.

Elsewhere in the South Asian market, it is believed in some quarters that a Pakistan power crisis is looming and the production of industrial gases and other products will suffer unless the country improves its energy supply.
Recently celebrating its 60th birthday as a country since partition in 1947, Pakistan’s modest growth continues however, spurred on by bulk and packaged gases business and dominated by the 65% market share of BOC Pakistan. Gas revenues rose by 2% in 2005 to reach $41m and were amplified by a further 5% in 2006 to reach $43m.

The market, which has experienced a difficult business environment over previous years, for merchant gases is oxygen driven and the nitrogen market is still largely under-developed, while just as Bangladesh suffered from a decline in the ship-breaking industry this has been the case in Pakistan too.

This market is seen as having a bright future outlook however, as highlighted by the Gulfcryo Group’s growth strategy and announcement that its Pak Hi Tech Ltd Islamabad facility has received its first shipment of liquid argon and commenced delivery of locally filled argon. The facility in the Rawat Industrial Zone of Islamabad, Pakistan is designed to produce high purity grades of argon gas and gas mixtures for the growing demands of the light bulb and welding industries.

A member of the Middle East’s Gulfcryo Group, Pak Hi Tech will maintain stocks of high purity and special gases for immediate delivery to customers throughout Pakistan.

Sri Lanka
In terms of the figures and percentages, the island nation of Sri Lanka is the fastest growing gases market in the South Asian region and enjoyed a revenues increase of 26% in 2006.

A grim future had been foretold for the Pearl of the Indian Ocean, as Sri Lanka is commonly referred to, and it had been widely predicted that 2008 would be the year of war for the country. If anything, it is believed that peace is a distant prospect for the area but in contrast, prospects in the industrial gas market would appear to be much more positive.

The 26% rise in revenues led to a market worth $12m in 2006, with packaged gases again the leading area of business and previous predictions of rapid growth appearing to be well placed.

Continual rises in revenues for the South Asian region, led by the dominant Indian market would appear to confirm the emergence of this market as a key gases player in the future. Internal demand for steel is yet again a prevailing factor for growth and part of the insatiable demand for oxygen and ASU capacity, while the overall level of recent investment, notably in India and Pakistan, provides a positive outlook ahead for the region.