LNG Sourcing : The challenges to
overcoming India’s Gas Deficit”
9th Petro-India, New Delhi
Challenges for India’s Energy Security
Date: 11th January 2011
Presented by: Rajeev Mathur,
Executive Director (Marketing), GAIL
Where are we heading?
The World Energy Outlook 2009 projects that world’s primary
energy needs would grow by 40% from around 12.0 billion TOE
in 2007 to over 16.8 billion TOE in 2030.
As for natural gas, the global gas demand is projected to
increase from 3.0 TCM in 2007 to around 4.3 TCM in 2030 i.e. an
average growth rate of 1.5% per year with the share of gas in
the global primary energy mix.
But that would depend largely on the world economic growth,
gas prices and government policies and hence there are large
uncertainties.
Investment in gas-supply
infrastructure
Cumulative Investment of US$ 5.149 Trillion is required globally across the
supply chain over the next 20 years both to replace existing capacity that
is lost to natural declines in production and to retirement of assets, as well
as to expand capacity to meet rising demand.
Transmission
and distribution
31% Liquefaction 63%
LNG
10%
Exploration and Regasification 25%
development
59% Carriers 12%
Source: International Energy Agency – World Energy Outlook 2009
Demand – Supply Gap
Estimated Sector-wise Demand*(MMSCMD)
Sector ‘11-12 ‘16-17
Fertilizers 79.36 95.0
Power 148.38 221.0
City Gas 15.83 31.0
Industrial 21.96 45.0
Petrochemical / Refineries 23.25 38.0
Sponge Iron / Steel 7.86 12.0
Total Demand (A) 300.64 442.0
Estimated Domestic Gas Supply**(MMSMCD) - Optimistic
Source ‘11-12 ‘16-17
ONGC (FIRM + INDICATIVE) 51.65 75.0
OIL 10.00 10.00
Pvt. / JVs (As per DGH) 109.07 180.09
Total Projected Supply (B) 170.72 265.0
Demand – Supply Gap (C) = (A – B) 129.92 177.0
* - 11-12 figures are as per XIth Five -year Plan estimates and 16-17 figures are projected.
** - Based on revised estimate of ONGC (Firm + Indicative) and DGH.
Existing and Projected Re-gas Capacity
Demand – Supply Gap (C) = (A – B) 129.92 177.0
LNG Supply Source ‘11-12 ‘16-17
Dahej (MMTPA) 10.00 12.50
Hazira (MMTPA) 2.50 5.00
Dabhol (MMTPA) 1.50 5.00
Kochi (MMTPA) 1.0 5.00
Total LNG Supply (MMTPA) 15.0 27.50
Total LNG Supply (MMSCMD) - (D) 55.0 101.2
Additional Re-Gas Capacity Required (MMSCMD) = (C) – (D) 74.92 76.80
Additional Re-Gas Capacity Required (MMTPA) 20.45 20.86
Major Challenges for the LNG Industry
Uncertainties and Barriers
It is far from certain that all the investment required will be
forthcoming.
There are a number of potential barriers to investment such
as:
The policies of resource-rich countries;
The ability and willingness of national companies to
develop their resources;
Opportunities and incentives for international
companies to invest;
Geo-political factors
Demand of LNG
In future, upto 70% of the demand of major sectors like power &
fertilizers may be met through domestic gas, still there is likely to be
sufficient demand for LNG for City Gas Distribution, Small & Medium
Enterprises, Commercial Establishments, Peaking Requirement of Power,
Steel and Fertilizer. However, the demand is highly price sensitive
in India.
In present situation, the long term LNG price is around 14.85% of JCC
on FoB basis and may go further high as the investment into the new
projects are more than the existing projects. In future, there will be no
LNG available on long term at Indian price (RasGas).
A Bulk of the Demand is Price Sensitive
Gas demand and supply, 2015 CRUDE = $70/BBL
Mmscmd, At customer gate prices 2 Domestic Supplies
Imports 388
311
276
59 230
19
171
25
A B C D
2010 year end Price of $13- Low Price of $10- Medium Price of $10- High Price of $6- Potential
consumption 15/ mmbtu 13/ mmbtu 11/ mmbtu 7/ mmbtu demand,
2015
▪ Industries ▪ Refineries ▪ Peaking ▪ Baseload power
Sectors with
demand
▪ CNG ▪ Industries power ▪ New fertilizer
transport ▪ Power plants plants
cogen
1 Based on estimated LNG supply of 9 mtpa in 2015 including 7.5 mmtpa from Qatar and 1.5 mmtpa from Australia
2 Inclusive of Customs Duty + Re-gasification Charges + VAT + State Taxes + Transmission Charges etc over the Ex-ship Price
Source: Indian petro; DGH; Company annual reports; Expert interviews; McKinsey analysis
Thank You
PIPELINE INFRASTRUCTURE
Existing P/L Capacity - 142 MMSCMD
Capacity after new P/Ls - 390 MMSMCD
NANGAL
MUNDRA
5 mmtpa BHATINDA
DELHI
BAREILLY
GURGAUN
AURAIYA LUCKNOW
MATHANIA AGRA DISPUR
JAGDISHPUR
DAHEJ I & II BARMER KANPUR
GWALIOR PATNA
10 mmtpa* PHOOLPUR
LNG
KOTA JHANSI VARANASI GAYA AGARTALA
UJJAIN VIJAYPUR
BOKARO Existing Construction
RAJKOT
BHOPAL
AHMEDABAD Existing – to start
KOLKATA
HAZIRA BHARUCH
BARODA
CUTTACK Upcoming
3.6 mmtpa SURAT DAMRA
BHUBANESHWAR
Transmission Pipelines
MUMBAI PUNE
Existing
RAJAMUNDRY KRISHNAPATNAM
DABHOL SOLAPUR GAIL’s Planned Pipeline
KAKINADA
5 mmtpa KOLHAPUR HYDERABAD RIL’s East West Pipeline
VIJAYAWADA RIL’s Planned Pipeline
GOA
NELLORE
ENNORE
HASAN
BANGLORE
2.5 mmtpa
City Gas/ CNG
CHENNAI
MANGALORE
MANGLORE Existing
5 mmtpa Planned
KANJIKKOD TIRUCHCHIRAPALLI LNG Terminal
COIMBTORE
KOCHI
TUTICORIN
2.5 mmtpa
INTEGRATED GRID TO LINK ANY SOURCE TO ANY MARKET