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Challenges of Developing Natural Gas Infrastructure in India

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Presentation Flow

Demand- Supply Scenario Supply Outlook Demand Outlook Emerging Scenario Supply Augmentation

LNGTransnational PipelinesAdditional Sources

End-Use Outlook Gas Sector Policy Developments Gas Sector Infrastructure – Present & Future Goals to achieve the vision Issues to be addressed Policy, Regulatory & Fiscal Provisions Required

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Domestic Reserves : 1,072 BCM (37.8 TCF)

(Balance Recoverable Reserve as on April 1, 2005)

R/P : 33.5 yrs Existing Producing Fields

Declining

Domestic Production 32 (1.1)

Domestic Availability 27(1.0)

LNG Imports* 6(0.2)

Total Availability 33(1.2)

INDIAN GAS SECTOR: SUPPLY OUTLOOK

CURRENT SUPPLIES (2005-06)

BCM (TCF)

Domestic Sources

LNG Import

CURRENT SUPPLIES – 33.5 BCM (1.2 TCF)

• HAZIRA (3.2BCM) YET TO STABILISE NOTINCLUDED UNDER CURRENT SUPPLIES

CURRENT SUPPLY SOURCES

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INDIAN GAS SECTOR: DEMAND OUTLOOK

POWER FERTILISER PETROCHEM/LPG

STEEL INDUSTRIES CITYGAS/ CNG

CONSUMPTION – 33 BCM (1.2 TCF)

DEMAND PROJECTIONSCURRENT CONSUMPTION

(2005-06)

HYDROCARBON VISION 2025

40%

29%

15% 4%

3%

9% 114

143

80

100

120

140

160

2007 2012 2017 2022

84

2025

Demand estimated to grow at 4.2% CAGR

DEMAND BY 2025 – 143 BCM (5 TCF)

(4 TCF)

(5 TCF)

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SUPPLY-DEMAND OUTLOOK :EMERGING SCENARIO

SUPPLY BCM TCF

SUB TOTAL FROM CURRENT SOURCES (2012) 26 0.9

TOTAL NEW DISCOVERIES 36 1.3

SUB TOTAL NEW LNG IMPORTS 24 0.8

TOTAL (PROJECTED CURRENT SOURCES + NEW DICOVERIES + NEW LNG)

86 3.0

DEMAND (BY 2012) 114 4.0

DEMAND (BY 2025) 143 5.0

PROJECTED SHORTFALL (2012) 28 1.0

PROJECTED SHORTFALL (2025) 57 2.0

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SUPPLY AUGMENTATION : LNG

LNG TO BECOME A SIGNIFICANT SUPPLY SOURCE

LNG share in India’s total Gas Consumption to grow from 11% in 2004-05 to 38.4% by 2009-10

12.5 MMTPA of LNG already tied up

10 MMTPA of LNG to be tied up

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SUPPLY AUGMENTATION :TRANSNATIONAL PIPELINES

India strategically located for gas imports through trans-national pipelines

Projected shortfall of 28 BCM in 2012 to double in 2025

SUPPLY BCM TCF

NEW PIPELINE IMPORTS

- Iran-Pakistan-India

- Turkmenistan-Afghanistan-Pakistan-India

- Myanmar-India

32.8

21

09

1.2

0.7

0.3

TOTAL PIPELINE SUPPLIES 52 1.8

TRANSNATIONAL PIPELINES TO PROVIDE COST EFFECTIVE SUPPLY SECURITY

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SUPPLY OUTLOOK :ADDITIONAL SOURCES

India has the 4th largest coal reserves in the world (247 Billion Tons)

Ranks 3rd in coal production (355 Million TPA)

Total Recoverable reserves of only about 20%

Exploitation of current unrecoverable reserves is a major challenge

Coal Bed Methane (CBM), Underground Coal Gasification (UCG) and Surface Coal Gasification hold significant potential for gas

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COAL BED METHANE (CBM)

INSITU COAL / LIGNITE

GASIFICATION

SURFACE COAL GASIFICATION

16 blocks awarded under 2 CBM rounds

Estimated reserves~ 1400 – 2600 BCM (50 – 92 TCF)

Equivalent to 40 - 75 yrs of current levels of natural gas consumption

First CBM Gas Expected by 2007

Total potential – 15,820 BCM (565 TCF), as per projections of UK based UCG Parnership

Equivalent to 450 - 500 yrs of current levels of natural gas consumption

Focus Areas - 5 States

(Gujarat, Rajasthan, TN, AP, W Bengal)

Total Coal Reserves – 247 BT

Focus Areas – 2 States (Orissa, W Bengal)

Syn gas potential identified 2.3 BCM (0.1 TCF)

SUPPLY OUTLOOK :ADDITIONAL SOURCES

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INDIAN GAS SECTOR: END USE OUTLOOK

Gas Based Power

Gas Based Fertilizer

LPG & Petrochemicals

CNG, PNG

City Gas- Industrial, Domestic, Commercial

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SECTORAL DRIVERS FOR CURRENT GAS DEMAND IN INDIA

12%12%

43%43%31%31%

58%58%

Non gas based units

10894 MW 12 MMTPA

1 MMTPA 2.5 MMTPA

POWER FERTILISER

LPG + LIQUID HYDROCARBONPETROCHEMICALS

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Urban Pollution - A major issue Successful Experience in Delhi,

Mumbai Currently in 10 cities Plans to introduce CNG and

city gas in28 cities

 Segment Total

Vehicles 259836

Domestic 413115

Commercial 2664

Small Industries

559

Gas Used (BCM)

1.86

CITY, CNG GAS SECTORS EMERGING AS AN IMPORTANT END-USE SEGMENT

CNG, PNG, CITY GAS DISTRIBUTION

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GAS SECTOR INFRASTRUCTURE :CURRENT OUTLOOK

LNG Terminals – 2 Terminals (Dahej, Hazira), 7.5 MMTPA capacity

Transmission Network – 6,300 KmsGAIL – 5,300 KmsGSPL – 525 KmsAssam Gas – 300 KmsOIL – 175 Kms

Distribution Network – 6,000 Kms (Delhi, Mumbai, Ankaleshwar, Bharuch, Surat, Baroda, Agartala)

CNG Stations – 278 (Delhi, Mumbai, Surat, Vijayawada, Ankaleshwar, Bharuch,Baroda)

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GAS SECTOR POLICY :SIGNIFICANT DEVELOPMENTS

100% FDI in E&P under NELP

100% FDI in natural gas pipelines

LNG imports, Gas Marketing under Open General Licence

Petroleum and Natural Gas Regulatory Board Bill under Finalisation (Unbundling, Third Party Access)

Gas Pipeline Policy under finalisation

Progressive Decontrol of prices

Policy Thrust to ensure Energy Security

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TUTICORIN

MANGLORE

HASANBANGLORE

CHENNAI

TUTICORIN

KOLKATA

RAJAMUNDRY

DABHOL

MUMBAI PUNE

BHARUCH

VIJAIPUR

HYDERABAD

BHUBANESHWAR

KRISHNAPATNAM

JAGDISHPUR

KANJIRKKOD

KOCHI

A 1 BLOCK, MYANMAR

KOTA

MATHANIA

PHOOLPUR

BHATINDA

NELLORE

TIRUCHCHIRAPALLI

KOLHAPUR

GAYA

BOKARO

COIMBTORE

JAMNAGAR

BAREILLY

AURAIYA

DELHI

BANGLADESH

MYANMAR-India Pipeline

NEPAL BHUTAN

AIZAWLAGARTALA

SHILLONG

DISPUR

GANGTOK

GAS SECTOR INFRASTRUCTURE:CURRENT AND FUTURE – A

COMPOSITE PICTURE

DAHEJ I & II10 mmtpa*

HAZIRA2.5 mmtpa

DABHOL5 mmtpa

COCHIN5 mmtpa

BARODASURAT

ANKLESHWAR

KANPUR

LUCKNOW

LNGExisting (7.5 MMTPA)

Upcoming (22.5 MMTPA)

Transmission PipelinesExisting (6,300 Kms)

Planned (8,400 Kms, US$ 4.2 Billion)

City Gas/ CNGExisting (10 cities)

Planned (28 cities)

VIJAYAWADA

PATNA

AHMEDABAD

SURENDARNAGARRAJKOT

FARIDABAD

GWALIOR

INDORE

UJJAIN

SOLAPUR

AGRAALLAHABAD

VARANASI

MATHURA

JHANSI

Iran-Pak-India Pipeline

Turk-Afg-Pak-India Pipeline

DAMRA

Gas By Sea Receipt (Likely Location)

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Points of Concern

True implementation of unbundled system Sourcing & customer tie-ups should be under the domain of

Gas Trading activities Minimum Excess capacity should be maintained One uniform model of transportation tariff to be adopted.

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Requirement of Provisions

Direct taxes Infrastructure status to cross country pipelines Tax Holiday Benefits for Gas pipelines

Indirect taxes Zero customs duty on supplies required for Natural Gas

Pipelines Zero custom duty on LNG/Natural Gas ‘Declared Goods’ status to Natural Gas under Central Sales

tax Act, 1956

A. Financial

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Cont..

Development of Indigenous Steel Mills for API 5L grade steel production

Encourage Indigenous Steel Mills to produce API grade steel Encourage new players in line pipe manufacturing and pipe

laying

B. Technology

C. Statutory Single Window Clearance at State Level for all statutory

clearances Single Window Clearance at Center for Environmental Clearance

and ROU Acquisition Common Corridor for Transmission Pipelines

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Thank You