one pipeline, two pipelines or no pipeline… what is the answer ?
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One Pipeline, Two Pipelines or no Pipeline… What is the answer ?. ICC Conference, Karachi 17-18 February 2002 Paul Samson Vice President, BHPBilliton. Outline. Pakistan Supply/Demand Options to fill the gap Iran to Pakistan Pipeline India Supply/Demand Options to fill the gap - PowerPoint PPT PresentationTRANSCRIPT
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One Pipeline, Two Pipelines or no Pipeline…What is the answer ?
ICC Conference, Karachi 17-18 February 2002Paul SamsonVice President, BHPBilliton
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Outline
• Pakistan • Supply/Demand• Options to fill the gap
•Iran to Pakistan Pipeline• India
•Supply/Demand• Options to fill the gap
• Iran to Pakistan and India Pipeline• Conclusions
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Pakistan: Supply & Demand
2000 2005 2010 2015
6000
4000
2000
BCFD
PAKISTAN
Existing
Developing
Most Likely Demand
Pakistan needs to add 1 Tcf/year just to replace the decline…
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Pakistan – Options to fill the gap
Increase the pace of exploration and development
0
5
10
15
20
25
30
35
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
Exp
lora
tio
n W
ells
00.511.522.533.544.55
TC
F D
isco
vere
d
Average discovery since 1991 0.75Tcf/year
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GAS DISCOVERIES vs PRODUCTION
0
5
10
15
20
25
30
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
TC
F
Cum Gas Discovered TCF Cum Gas Produced TCF
Pakistan – Options to fill the gap
… if gas potential and investment are present
New Petroleum
Policy
Revised Petroleum
Policy
FORECAST
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Pakistan – The cost of not filling the gap @US$20/bbl
• or import gas from Turkmenistan, Iran, Qatar…
22%
18%8%
7%14%
75%
4%8%
13%
ODSGST
DOMESTIC GAS H S F O
Foreign Exchange
Foreign Exchange
67% more67% more
ProducerTake
F&DCost
Royalty GoPEquity
Tax
12%
18%
GST T&D Importedfuel
Freight&Margin
Fuel OilFuel Oil
33% more33% more
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The Iran to Pakistan Pipeline Project
20°N
60°E 80°E
32”
IRANPAKISTAN
CHINA
NEPAL
UAE
SAUDI ARABIAOMAN
INDIA
QATAR
Bombay
Hyderabad
Tehran
Karachi
Delhi
Lahore
AssaluyahSouthPars
HBJ
1115km
$1.25b
Length 1875 kmTotal Cost $1.9b
Arabian Sea
0 500 km
760km
$0.65b
• 0.5 to 1.5BCFD over 20 years
• High CV gas
• 32” Assaluyeh to AC1-X
• Class 900 , x80
• MAOP 2220psig
32”
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India’s options to fill the gap
6000
4000
2000
BCFD
2000 2005 2010 2015
Existing Production
New Developments
Most Likely Demand
• Use domestic coal • Explore for more gas• Import fuel oil• Import LNG• Import pipeline gas from Bangladesh, Qatar, Iran
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The Iran to India Project
20°N
60°E 80°E
36” 36”
IRANPAKISTAN
CHINA
NEPAL
UAE
SAUDI ARABIAOMAN
INDIA
QATAR
Bombay
Hyderabad
Tehran
Karachi
Delhi
Lahore
AssaluyahSouthPars
HBJ
1115km
$1.5b
Length 2775 kmTotal Cost $3.8b
Arabian Sea
0 500 km
760km
$1.1b900km
$1.2
36”
• 1.0 to 2.0BCFD
over 20 years
• 36” Assaluyeh to
Delhi
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The Iran to Pakistan to India Project
20°N
60°E 80°E
44” 4
4”
1-2 36”
IRANPAKISTAN
CHINA
NEPAL
UAE
SAUDI ARABIAOMAN
INDIA
QATAR
Bombay
Hyderabad
Tehran
Karachi
Delhi
Lahore
AssaluyahSouthPars
HBJ
1115km
$1.86b
Length 2775 kmTotal Cost $4.16b
Arabian Sea
0 500 km
760km
$1.20b900km$1.10b
• Throughput:
1.5 to 3.5BCFD
3.8% pa growth
• Class 900 , x80
• MAOP 2220psig
• 44” to Indian border
• 36”from border
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The Value Proposition to Pakistan
Delivered to ACX1 @ $18/bbl oil price
Ira
n P
aki
sta
n &
Ind
ia P
ipe
line
Ira
n P
aki
sta
n
Pip
elin
e
Imp
ort
ed
HS
FO
Ga
s @
Po
licy
Pri
ce
FX Component
Excludes anyExcludes anytransit feestransit fees to to
PakistanPakistan
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The Value Proposition to India
Indifference point with
imported coal for 1200MW
baseload power
generation based on
US$30/tonne coal price
Indifference point with
imported coal for 1200MW
baseload power
generation based on
US$30/tonne coal price
Current gas
Market Prices
Current gas
Market Prices
LN
G
Pip
e B
an
gla
des
h
GA
IL R
eta
il
Delivered to Delhi @ $18/bbl oil price
Pip
e Ir
an
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What needs to happen?
• Explicit Government(s) support• Establish regulatory framework• Integrated participation of key sponsors from source to market• Update feasibility study• Enter into sales agreement with potential customers• Set up sponsors leading to consortium• Arrange financing• Execute • First gas to Pakistan: 36 months from financial closure
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The Benefits
Pakistan:– Affordable, unlimited supply– Internationally benchmarked compensation for transit– Abundant energy for uninhibited economic growth
India:– Affordable, unlimited supply – Economic growth– Diversity of supply
Iran: – Diversification from oil revenue– Long term foreign exchange earnings
Regional Stability ???
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Conclusions
• One pipeline is better than two and much better than none…
• Project fundamentals are strong
• Provides long term affordable energy supply
• Political hurdles can be overcome – economic incentives
• There are a few visionary companies believing in the project
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Role of BHPBilliton
• BHPBilliton - world’s leading diversified resources company
• Discovered and developed Zamzama gas field
• Has been promoting gas exports from Iran since 1993
• Completed feasibility study from Iran to Pakistan in 1998
• BHPB mandated by NIOC to lead the study and execution