lng infrastructure - gas based economy in india
TRANSCRIPT
11th World PetroCoal Congress (11th WPCC 2021) and the Virtual World Future Fuel Summit (WFFS21)
Keynote Session -VIII: LNG for a Green Energy Transition
17- Feb -2021
LNG Infrastructure - Gas Based Economy in India
Anil Joshi
President, GSPC LNG Ltd.
Contents
1. India’s commitment on climate change
2. Challenges for transition to Gas based economy
3. International LNG Trade and LNG imports in India
4. Energy transition in India
5. Natural Gas infrastructure in India
6. Price affordability gap and sectoral reforms
7. Evolving LNG Business models
8. Growing demand for green LNG
9. Conclusions
India’s commitment on climate change
• India’s commitment on climate change as per the Paris agreement – COP 21
– India is committed to reduce its carbon footprint by 33% - 35% from 2005 levels as per COP 21-United Nations Framework Convention on Climate Change (2015)- Paris Agreement.
– To achieve approx. 40 % cumulative electric power installed capacity from non-fossil fuel based energy resources by 2030
– To create an additional carbon sink of 2.5 to 3 billion tonnes of CO2 equivalent through additional forest and tree cover by 2030
• India’s measures to achieve the commitments
– Massive push towards gas based economy with thrust on renewable energy to achieve sustainable development.
– Govt. of India aims to increase the share of natural gas in India’s primary energy basket from existing 6% to 15% by 2030.
– Huge focus - improving energy efficiency (Industrial equipment, LED lighting etc.)
– Reducing emissions by reducing diesel intake, moving to higher vehicle emission norms/ standards (BS-VI)
– Increasing share of renewable energy in power generation
Source : PIB, UNFCC website
Challenges for transition to Gas based economy
Challenges
2. Infrastructure Accessibility
3. Affordability against alternate
fuels
4. Regulatory and Tax Reform
interventions
1. Availability of Supply
International LNG Trade and LNG imports in India
• International LNG Trade has grown at 9 % p.a.(approx.) for past few years.
• Multiple factors such as abundant LNG supply, promotion of clean and green fuel (NG) in many countries, Climate change etc.
• India’s LNG imports have also steadily risen with growth in LNG infrastructure, Development of Transmission Pipelines and last mile connectivity through CGD network development
• Key policy reforms and regulations such as Unified tariff, Setting up of Gas exchange etc. shall further push the usage of Natural Gas in India.
Source : GIIGNL, Bloomberg
245.6 263.6
289.9 313.8
354.7 375
0
50
100
150
200
250
300
350
400
2015 2016 2017 2018 2019 2020
International LNG Trade (MMT)
LNG Trade (MMT)
14.6
19.0 19.2
22.4 24.0
26.7
0.0
5.0
10.0
15.0
20.0
25.0
30.0
2015 2016 2017 2018 2019 2020
MM
T
India LNG Imports (MMT)
India LNG Imports (MMT)
Natural Gas Consumption in India
98 104 103
144
161 155
134 128
124
128
136 144 148
153
152
25 30 29 32 35
42 40 49 51
58 68
75 79 85 86
25% 29% 28%
22% 22%
27% 30%
38%
41% 46%
50% 51% 53%
55% 57%
0%
10%
20%
30%
40%
50%
60%
0
20
40
60
80
100
120
140
160
180
2006-07 2008-09 2010-11 2012-13 2014-15 2016-17 2018-19 2020-21
MM
SCM
D
Total Gas Consumption India (Domestic + RLNG) LNG import LNG as % of Total Consumption
• LNG meets more than 50 % of India’s total NG consumption.
Source : PPAC, 2020 -21 refers to April 2020 to Dec 2020 period
Natural Gas/ LNG -constituents of Energy transition
LNG in Energy Transition
New Applications (of LNG) and emergence of Small Scale LNG and New business models.
Gas Infrastructure development- Big thrust area
Abundance of LNG supply. Continued FID on new LNG liquefaction projects.
Power Gas based power to replace coal and support renewables for peaking /time of the day loads
Transport LNG, CNG directly competing and replacing liquid fuels like diesel & petrol
Industrial Alternative fuel for industrial applications. NG/LNG can replace polluting liquid fuels like FO, LDO etc.
Others (Refinery, Fertilizer) Indian emerging as Refinery & Petchem hub. Conversion of Fertilizer plants on Gas.
Mundra
Dabhol
Jaigarh
Kochi
Chhara
Jaffrabad
Hazira Dahej
Ennore
Dhamra
Natural Gas Infrastructure - India
LNG Terminal
Operational
Under Construction / Proposed
LNG Terminals - India
Sr. No Terminal Location State Promoter Capacity (MMTPA)
Operating Terminals
1 Dahej Gujarat Petronet LNG Ltd. 17.5
2 Hazira Gujarat Shell 5
3 Dabhol Maharashtra Konkan LNG Ltd. (GAIL) 5*
4 Kochi Kerala Petronet LNG Ltd. 5
5 Ennore Tamil Nadu IOCL 5
6 Mundra Gujarat GSPC LNG Ltd. 5
Total 42.5
Under construction and planned
1 Jaffrabad Gujarat Swan LNG Private Ltd. 5
2 Jaigarh Maharashtra H - Energy 4
3 Dhamra Odisha Adani Group 5
4 Chhara Gujarat HPCL Shapoorji Energy Pvt. Ltd. 5
5 Dahej Gujarat Petronet LNG Ltd. 2.5
Under construction and planned 21.5
Total (Operating + Under Construction/Planned) 64
* Note: Dabhol - 1.7 MMTPA usable out of 5 MMTPA on account of absence of breakwater.
PLL Dahej slated for expansion to 20 MMTPA and in future possibly to 22.5 MMTPA.
Changing LNG/Gas infrastructure landscape
Focus on developing pan India Gas infrastructure and last mile connectivity. LNG terminals: 42.5 MMTPA (Existing) to 64 MMTPA (By 2025)
Operational pipeline: 17000 Kms. Under Construction: 15550 Kms (approx)
CGD coverage:20% India’s population (2019) to 70% population by 2025 (estimated)
CGD Sector-Creating robust demand growth
8.0 8.4 9.3 10.3 11.8 13.0
7.4 7.3 8.3 10.6
10.9 13.0
1.2 1.1 2.4
2.4 2.6
2.7
16.6 16.8 20.0
23.4 25.3
28.6
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
CGD Consumption (PNG & CNG, MMSCMD)
CNG Consumption Consumption by Ind & Comm Customers PNG Consumption Total (MMSCMD)
Source : PPAC. PNG customers & CNG stations data till 30.11.2020 (for 2020-21).
24 27.3
31.6 33.2
42.8 50.4
60.68
70.75
0
10
20
30
40
50
60
70
80
FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 FY 21
No. Of PNG Customers
PNG Customers (Lakhs)
936 1010 1026 1167
1424
1730
2207
2,543
0
500
1000
1500
2000
2500
3000
FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 FY 21
No. Of CNG stations
No. Of CNG stations
CGD sector ensures connecting to the last mile and catering to the smallest consumers necessary for widespread adoption/transition to NG.
Reducing the price affordability Gap & Sectoral reforms
• There is an affordability gap between natural gas/LNG and other competing fuels in several sectors.
• Energy transition is function of competition among the alternative fuels.
• IEA study indicates that efforts are required to make NG prices more affordable to the industry.
• Continued regulatory reforms on pipeline tariffs, CGD regulations, Setting up of gas exchange for proper price benchmarking, setting up of TSO for pipelines etc. are very positive steps.
• The next progressive step for the sector could be reforms on taxation (Natural Gas under GST, No customs duty on imports of LNG etc).
Source : IEA India Energy Outlook 2021
Mm3 - MMSCM
Business Models for LNG
Traditional Model
(Classic LNG Value Chain)
Unloading & Regasification
Offtake through pipelines
Traditional + New Avenues*
Storage
Reloads
(Involving Storage)
Retail LNG
(Industrial fuel, Transport via road tankers & barges)
LNG as Automotive Fuel
(Road transport, Bunker fuel, Heavy duty vehicles)
*- New avenues in conjunction with traditional models
Evolving LNG Business Models – Emergence of SSLNG
SSLNG Small Scale LNG
LNG, CNG and L-CNG concept
Source: Wegrzyn and Litzke, 1999
• Indian cities started implementing CNG in late 90’s and early 2000.
• Greater emphasis for clean-air cities is emerging in India and CNG (an environment friendly fuel) could be its biggest beneficiary.
• LCNG can be a temporary (or even permanent) solution to provide CNG connectivity to cities1 not on NG pipeline grids.
• This can also act as a temporary solution where(when) public protests are seen in the process of laying NG pipelines.
• Thus LCNG/LNG road tankers can become a potential mode of providing access to gas in absence of pipelines.
• LNG by road tankers have potential to support a mini or micro pipeline grid targeting a specific sector or area like industrial estates.
Note: 1 This has been successfully implemented in the city of Bhubaneswar in Odisha, Chiplun & Nagpur in Maharashtra. Recently in Jodhpur & Bhopal.
LNG Satellite Terminals and LCNG
Vadodara, Gujarat
Ratnagiri District, Maharashtra
Bhubaneswar, Odisha Nagpur, Maharashtra
Some examples of Satellite LNG Terminals in India supporting LCNG and LNG as fuel.
LNG as a fuel
• LNG has potential to replace Diesel as an automotive fuel used in long haul heavy duty trucks as well as public transport buses.
• LNG as automotive fuel has many economic advantages and environmental benefits (LNG also does not emit soot, dust and fumes, prominent reason for air crisis in some parts of India.LNG also reduces SOx and NOx emissions when compared to diesel).
• In Nov.2020 foundation stone laying and announcement for India’s first 50 LNG stations located across various highways was announced. It is the first step to achieve target of 1000 LNG stations.
• Identification of specific transport corridors for implementation. For e.g. :
Mundra - Ahmedabad
Mumbai - New Delhi
Trivandrum - Mangalore
Bangalore – Mangalore
Mumbai - Chennai
• Investments in infrastructure (primarily by OMCs, LNG terminals, OEMs etc.).
Growing demand for Green LNG
• The post pandemic World has started moving towards Energy transition at an even faster pace with steps and strategies to achieve targets of either zero or net-zero carbon emissions.
• LNG as a source of energy / fuel also needs to be evolve and be a part of this Energy transition.
• There are attempts being made to buy and sell carbon neutral LNG cargoes.
– An LNG cargo is considered carbon neutral if carbon dioxide emissions at various stages along the LNG value chain are removed from the atmosphere by using carbon capture and storage processes, reducing flaring and using renewable power.
– Carbon emissions that cannot be reduced are offset through the purchase of carbon credits or investments in afforestation, reforestation and renewable projects that benefit the environment by producing oxygen and reducing greenhouse gas (GHG) emissions. All carbon-neutral LNG deals with Asian buyers so far have involved the purchase of carbon credits.
• Shell, Total and Jera Global Markets have sold a total of around 9 carbon-neutral LNG cargoes on a spot basis to Asian buyers since June 2019.
• Singapore's Pavilion Energy and Qatar Petroleum signed in Nov. 2020 the only carbon neutral LNG term supply deal for 1.8mn t/yr for 10 yrs from 2023.
• QP has set target of reducing GHG emissions by capturing & storing 7 MN T/Yr of CO2 from its operations by 2030.
• Shell’s target to become net zero emissions energy business by 2050.
• LNG demand continues to grow and so does carbon consciousness which would further push demand for greener LNG in future.
Key Conclusions
India’s commitment to Paris climate accord shall ensure transition towards clean energy.
Government of India’s (GOI) vision to increase the share of natural gas in India’s energy mix from 6 to 15% by 2030 is a step in the right direction.
Accelerated emergence of Green LNG / Carbon neutral LNG as part of Energy transition in post pandemic World.
LNG’s abundant availability in international market shall provide security of supply for undertaking the Energy transition. Pace of Infrastructure development needs to match up.
LNG business model has evolved from traditional LNG value chain towards Small Scale LNG. Flexibilities in LNG contracting, flexibility of pricing, delinking of LNG from Oil linked contracts and commoditization of LNG.
Thank You