India: Demand for LNG

Vemula Srinivasulu, former Executive Director, APGIC

Dt:17th Sep 2014

India – Today

Stable government at the centre

End of coalition politics

Decisive mandate for development

Big infra push on the cards

Speedy clearances – Project Monitoring Group at Cabinet Secretariat

Prime Minister monitoring important/mega projects

India’s market cap reaches all time high 1.5 TrillionUSD (June,14)

Upward movement in GDP after a long lull

States competing for investments – healthy sign

2

India recorded highest growth since Q4, 2011 at 5.7% in Q2, 2014

3

Oil 29.5%

Gas 7.8%

Coal 54.5%

Nuclear Energy

1.3%

Hydel 5.0%

Renewables

2.0%

2013

Oil 30.3%

Gas 9.2%

Coal 52.7%

Nuclear Energy

1.3%

Hydel 4.6% Renewables

1.9%

2012

India : Energy mix

Decline in gas contribution in

2013 due to shortfall in domestic

supply - KG basin

However, share projected to

reach 20% by 2025.

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Coal50%Oil

25%

Gas20%

Hydel2%

Nuclear3%

2025

Data Source 2012& 2013: B P Statistical Review 2014Data Source 2025: India Hydrocarbon Vision 2025

India : Natural Gas Vs Energy Consumption

5

321 345 367 390 420 447 484 510 535 573 59526.6

28.732.1

33.536.1

37.246.7

56.755.3

52.9 46.3

0

100

200

300

400

500

600

700

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Natural Gas (in Mtoe) Total Energy (Mtoe)

Data Source : B P Statistical Review 2014

Natural Gas Consumption in total energy consumption is less than 10%

India Gas Consumption: Sector-wise breakup

Natural Gas Consumption has grown at an average rate of 8.75 % from 2005-06 to 2011-12

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Source: VISION 2030 by PNGRB

85 86 8490

122

141

163

141

0

20

40

60

80

100

120

140

160

180

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

POWER FERTILIZER PETROCHEMICAL DOMESTIC FUEL

INDUSTRIAL FUEL OTHERS TOTAL Expon. (TOTAL)

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Sector 2013-14 2017-18 2021-22

Power 104.59 173.88 233.88

Fertilizer 59.96 103.45 107.85

City Gas 16.22 26.62 46.25

Industrial 20 28 37

Petrochem/ Refineries

56.57 68.1 81.99

Sponge Iron/Steel 8 9 10

Estimated Demand 265.33 409.05 516.97

Source: “Vision 2030” Natural Gas Infrastructure in India -2013Note: Out of 265 MMSCMD of demand, India could able to supply 140 MMSCMD in 2013-14

India Gas Demand Projections: Sector-wise breakup

Natural Gas Demand is likely to increase at an average rate of 8.7 % from 2013-14 to 2021-22

Domestic Gas : Inadequate

India’s proved global natural gas reserves - 33.7 billion Cubic meter, which is 1 % of

world’s 3.37 trillion cubic meter (Source: B P Statistical Review 2014)

80 % of production is from off shore fields

Remaining from onshore filed, in which 90 % from Assam, Gujarat, Andhra

Pradesh

Coal Bed Methane : Not Significant

4 rounds of bidding completed

33 blocks awarded, out of which 5 blocks are producing 0.23 MCM/day

Shale gas – yet to be explored seriously

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Production in 2013 :33.7 bcm equivalent toaverage of 92.3 MMSCMD

Reserve to production ratio of 40.2, vs-a-visworld average of 55.1

India : Gas Consumption, Production & Import

9

80.8 87.4 97.8 102.2 109.9 113.2142.2

172.6 168.2 161.1 140.8

80.8 80.0 81.1 80.3 82.5 83.6

107.4

139.2 126.3110.4

92.30.0 7.4

16.7 21.927.4 29.6

34.8

33.441.9

50.7

48.5

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Gas Import (Avg. MMSCMD) Production (Avg. MMSCMD)

Consumption (Average MMSCMD)

Data Source : B P Statistical Review 2014

India - LNG import is on the rise

Primarily through Dahej and Hazira LNG terminals

Entire Import through LNG, No Import through pipelines

10

0.00

1.80

4.07

5.33

6.677.20

8.47 8.13

10.20

12.3311.80

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Gas Import (MTPA)

Data Source : B P Statistical Review 2014

LNG Import to India: Projections

LNG imports to rise from 47MMSCMD in 2012-13 to 72MMSCMD in 2017-18 at a CAGRof 8-9%

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India’s LNG requirements primarily met by Qatar;however its share has reduced from 83% in 2007-08 tothe current 76%

Currently, PLL is having a long term supply contract; 7.5mtpa with Rasgas, Qatar

Supplies from Gorgon, Australia expected to be deliveredat Kochi terminal by 2015-16

GAIL : Tie-up in USA (HH based) to start in 2016-17

Dahej and Hazira handle more than 90% of India’s LNG imports

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Year Regas Terminal Quantity (MMTPA)

2012-13 Dahej 8.37

2012-13 Hazira 2.85

2013-14 Dahej 9.24

2013-14 Hazira 2.65

2014-15* Dahej 4.58

2014-15* Hazira 1.24

*Data for 2014-15 is up to Aug’ 2014

LNG Import : Key Drivers Demand from affordable segments – City gas and industrial usage

Proposed gas price pooling for power sector – to improve affordability

PLF of gas based power plants ( 22,000 MW) – less than 30%

Gas stranded capacity of more 10,000 MW

Decline in domestic gas supply - KG D6 & other blocks

Delay in trans-national pipeline- TAPI

Revision of domestic gas price adopting Rangarajan formula

Affordable price of LNG – Post revision gap between LNG and domestic gas will belesser

Indian Rupee vs USD

Fertilizer policy

Infrastructure and last mile connectivity

Inter pipeline swapping, inter state tax ( GST can be an enabler)

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LNG Supply to India - Long term contracts

From Rasgas, Quatar, linked to Dahej Terminal

7.5 MTPA for 25 Years

Price linked to JCC (12.67% )

From Gorgon, Australia, linked to Kochi terminal

1.5 MTPA , for 25 Years

Price linked to JCC (14.5% )

From Sabine Pass Liquefaction terminal :

3.5 MTPA starts from 2017

Import by GAIL, Price linked to Henry Hub

From Cove Point Liquefaction terminal

2.3 MTPA, Import by GAIL, Price linked to Henry Hub

From Gazprom Russia

2.5 MTPA, import by GAIL (India) Limited

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LNG Supply to India - Medium and Short Term Contracts

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Medium and Short term contracts :

Around 2 – 3 MTPA

Marubeni, GDF Suez, Gas Natural Fenosa

Spot Contracts:

1 – 1.5 MTPA

From countries viz. Qatar, Yemen, Nigeria, Oman, Algeria, Trinidad and Tobago, Norway, Equatorial Guinea, UAE etc.

Indian Rupees USD/INR - Volatility

LNG price is > 50% more today than in 2008 purely in Rupee terms due to currency depreciation

TAPI Pipeline : Import from Turkmenistan

Executed Gas Sales and PurchaseAgreement (GSPA) in May, 2012

Landed cost at Pakistan – India borderis said to be USD 13/ MMBTU

Approx. 1800 kms long pipeline

India’s share 14 BCM/ year (approx. 38MMSCMD)

Estimated cost: 7.6 Billion (2008)

SPV yet to be formed

Pipeline is expected to be operationalin 2018

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Beyond 2017, LNG penetration to be defined by regulatory push

Peak hour Policy

Natural gas based plants are best suited for meeting peak power requirementsas they can be switched on and off with generation being ramped up as perconvenience

Subject to incentives offered by the government, it can promote usage of gasfor power generation (as tariffs for peak hour are expected to be higher)

Renewable Energy Policy

Considering the rising energy needs of India and its growing focus on use ofclean fuels, there is a significant potential for increased cleaner fuelsconsumption (solar, renewables, gas)

It will potentially result in structural shift in country’s fuel mix from oil towardscleaner fuels

Urea Pricing and Investment policy

Subsidization of POL products

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Infrastructure For LNG Re-gasification

and gas Distributions

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Kakinada

India’s Regas Terminals

Currently, Four LNG terminals are in operation

Total Capacity : 20 MMTPA

All land Based, all in West Coast

Utilization of newly built terminals at Dhabol and Kochi are low

Various terminals planned – both east and west coast

East Coast terminals :

Mixed development : Land based and also FSRU

Govt of AP gave clearance for two projects viz Kakinada andGangavaram

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LNG Import Infrastructure : Existing and outlook

FSRU based /

Land based

Current 2015-16 2019 -20

PLL Dahej Land Based 10 15 15

Shell , Hazira 3.7 5 7

PLL Kochi 5 5 10

Dhabol 2 5 5

Kakinada FSRU based 3.5 5

Gangavaram Land / FSRU based 3.5 5

Mundra Land based 7.5 7.5

Pipavav Land Based 3.5 3.5

Ennore Land based 5 5

Mangalore Land based 5

Others 5

Total LNG Capacity

(MMTPA)

20.7 53.0 73

Gas Qty. 73.5 185.5 255

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Figures in MTPA

LNG Projects in West Coast existing & planned

LNG Terminals planned in West Coast:

In Operation :

Dahej

Hazira

Dhabol

Kochi

Planned :

Mundra

Pipavav

Mangalore

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Dahej

Hazira

Dhabol

Kochi

Mundra

Pipavav

Mangalore

Terminals underoperation Terminals planned

LNG Projects planned in East Coast

LNG Terminals planned in East Coast:

FSRU based :

Kakinada (2 nos.)

Krishnapatanam

Paradip

Digha

Karaikal

Land based terminal:

Gangavaram

Ennore

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Kakinada

Gangavaram

Krishnapatanam

Paradip

Digha

Ennore

Karaikal

FSRU (In progress)

Land based LNG terminal

FSRU (Planned)

Distribution facilities in East Coast of India

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Name of the P/L

From – To Capacity(mmscmd)

Current flow

MallavaramBhilwarapipeline

Kakinada –Bhilwara

57 Under Construc

tion

Kakinada Srikakulampipeline

Srikakulam, further to Haldia

20 Notifiedfor

bidding by

PNGRB

EnnoreNellore

Ennore -Nellore

5 Under bidding

Vijaywada -Nellore

Viajywada– Nellore

10-15 Proposed

To Bhilwara

To Ankot (Gujarat)

GAIL KG Basin Network

ENPL

Ennore

Krishnapatnam

Gangavaram

Kakinada

Legends:GAIL KG Network: EWPL (RGTIL) :MVPL (under const):P/l under bidding : LNG Terminals planned:Gas Fields :

Offshore Gas fields(RIL, ONGC, Cairn, GSPL)

FSRUs in East India : Need and Opportunities

Opportunities

Proximity to Australia LNGexport projects as compared towest coast

Easy and ready evacuationthrough well established PipelineConnectivity:

Kakinada connected to local and as well to various demand centres across the country through transmission and distribution network

Vizag and Ennore : connection plan made

Other ports : can be quickly connected

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To Bhilwara

To Ankot (Gujarat)

GAIL KG Basin Network

ENPL

Ennore

Krishnapatnam

Gangavaram

Kakinada

Legends:GAIL KG Network: EWPL (RGTIL) :MVPL (under const):P/l under bidding : LNG Terminals planned:Gas Fields :

Offshore Gas fields(RIL, ONGC, Cairn, GSPL)

Telangana - new State of India

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Telangana beckoning Natural and human resources abundant

Proactive leadership and Government

Large number of Engineers and other professionals

Skilled workers

Huge land bank with the Govt for industrial purposes

English speaking population

Major IT centre

Great culture and heritage

good climate round the year

Medical tourism and leisure tourism

Good industrial policy in offing

Emphasis on law and order

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thanq

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