17th INTERNATIONAL CONFERENCE & EXHIBITION

17th INTERNATIONAL CONFERENCE & EXHIBITION

ON LIQUEFIED NATURAL
ON LIQUEFIED GAS
NATURAL GAS (LNG
(LNG 17) 17)

MEETING DEMAND CHALLENGES OF

AN EMERGING LNG MARKET: INDIA

<Title By:
<TitleofofPresentation>
Presentation>
By: A KName>,
By:<Author
<Author Balyan,
Name>, <Organization>
<Organization>
Petronet LNG <Date>Limited
<Date>
April 17, 2013
 OVERVIEW

 India’s Energy Consumption

 Natural Gas Demand Supply Balance

 Gas Infrastructure

 Role of LNG & Meeting Demand Challenges

 Petronet’s Terminal

2
 INDIA – A MAJOR ENERGY CONSUMER

 India is the 4th largest consumer of energy China USA

Russia India
in the world after USA, China and Russia Germany Brazil
France Saudi Arabia
accounting for around 4.6% of world energy
UK Australia
consumption Thailand Kazakhstan
Rest of World
 The total energy requirement is projected to

grow at 6.5% per year between 2012-13

and 2016-17 21.3%
37.8%
 While the per-capita energy consumption of
18.5%
India at present is almost half the global
average i.e. 0.8 mtoe vis-a vis 1.8 mtoe, 0.4%
with the rising income levels along with 0.9%
5.6%
1.6% 2.0% 2.2% 4.6%
growth in Indian economy, the per capita 1.0% 1.8% 2.5%
energy consumption is likely to see a two-
fold increase in next 10 years
3
 PRIMARY ENERGY CONSUMPTION (mtoe) - WORLD

4500
3901 4059
(33%)
(37%) 3724
4000 3519 (30%)
(39%) Coal
3500 2982 2954
(28%)
(24%)
3000 2217
2501 Oil
(24%) (24%)
2157 Gas
2500
(24%)

2000 Hydro

1500
791 Renewables
662
617 585 (6%) 599
1000 627
(6%)
(7%)(6%) (6%) (5%) Nuclear
195
500 84
(2%)
(1%)
0
0
2000 2005 2011
Source : BP Statistical Review-June 2012
 PRIMARY ENERGY CONSUMPTION (mtoe) - INDIA

350

296
(53%)
300 Coal

250 Oil

184
200 171 (51%) Gas
(68%) 162
(29%)
150 120 Hydro
(33%)

100 Renewables
55
38 32 (10%)
50 (15%) (9%) 22 30 Nuclear
23 17
(6%) 4 (5%) 9
7
(9%) (7%) 4 2 (1%) (2%)
0 (1%) (1%)
(1%)
0
2000 2005 2011
Source : BP Statistical Review-June 2012
 PRIMARY ENERGY SOURCES PRODUCTION CAGR
(1970-2011)

Source : Statistical Data 2012 , Ministry of Statistics 6

 CURRENT GAS DEMAND &
DOMESTIC SUPPLY SCENARIO
1000 (25.3)
Demand Domestic Supply 713.5
900
(mmscmd) (22.2)
(bcf/day) 625
800

700
(15.7)

600 (12.7)
442

500 (10.9) 358

(9.6)
400 (8.0) (8.8) 307
272
300 248
227 211.79 231.42
200 156.7 172.2
120.63 (7.5) (8.2)
101.1 102.5 111.26
(5.6) (6.1)
100
(3.6) (3.6) (3.9) (4.3)

0
2012-13 2013-14 2014-15 2015-16 2016-17 2019-20 2026-27 2029-30

Source : Vision 2030, Natural Gas Infrastructure in India 7

 SECTOR WISE PROJECTED GAS DEMAND

400
Power
350 Gas Demand (mmscmd)
300 Fertilizer
250
200 City Gas

150
Industrial
100
50 Petchem/Refin
eries/Internal
0 Cons.
2012-13 2013-14 2014-15 2015-16 2016-17 2019-20 2026-27 2029-30

2012-13 2013-14 2014-15 2015-16 2016-17 2019-20

Power 86 104 122 139 157 202
Fertilizer 60 60 60 72 97 106
City Gas 15 16 17 18 22 36
Industrial 20 20 22 25 27 35
Petchem/Refineries/Internal
Consumption 38 40 42 44 47 54
Sponge Iron/Steel 7 8 8 8 8 10
Total Realistic Demand 227 248 272 307 358 443
Source : Vision 2030, Natural Gas Infrastructure in India 8
 INDIA – A MAJOR GAS/LNG CONSUMER

 13th largest gas consumer – 61 bcm(~165 mmscmd)

 5th largest LNG importer– 17 bcm(~46 mmscmd~13
mmtpa)
 Economy growing at CAGR of 6-7% with similar
growth in Energy Consumption
 Share of Natural Gas in Indian Energy basket to
increase from 10% to 20% by 2025
 Despite increase in domestic gas production-
dependency on imported gas to increase substantially
 LNG which currently constitutes 30% of natural gas
consumption in country to have a share of more than
50% by 2025
9
 SNAPSHOT OF OPERATIONAL, UNDER CONSTRUCTION, PLANNED
& POSSIBLE LNG TERMINALS IN INDIA

2013 2016 2020 mmtpa

Existing
Dahej 10.0 15.0 20.0 Petronet LNG
Hazira 5.0 5.0 5.0 Shell & Total
Dabhol 1.2 5.0 5.0 RGPPL (GAIL & NTPC)
TOTAL 16.2 25.0 30.0
Under Construction
Kochi - 5.0 5.0 Petronet LNG
TOTAL - 5.0 5.0
Proposed
Ennore - 5.0 5.0 IOCL
Gangavaram - 5.0 5.0 Petronet LNG
Mundra - 5.0 5.0 Adani - GSPC
TOTAL - 15.0 15.0
Possible
West Coast - - 2.5 Hiranandani
Jamnagar/Kakinada - - 5.0 RIL-BP
East Coast (FSRU) - 2.5 5.0 Shell/GAIL
TOTAL - 2.5 12.5
Grand Total 16.2 44.5 60.5 10
 INDIA’S GAS INFRASTRUCTURE
Existing P/L Network : 11900 KMS (283 mmscmd)
Proposed additional P/L Network :
14000 KMS (540 mmscmd) by 2016-17

Dahej LNG Gangavaram LNG

Terminal Terminal

Hazira
LNG
Terminal

Dabhol LNG
Terminal

Kochi LNG
Terminal
 LNG SOURCING FOR INDIA

 To ensure sustained and continuous availability of RLNG, 70-75% to be tied-up

on long term basis , balance through mix of short term & spot

 Current Long Term contracts:

 Petronet’s Contracts
o Petronet-RasGas 7.5 mmtpa supplies commenced in 2004
o Petronet-Exxon Mobil(Gorgon) 1.5 mmtpa supplies to commence in 2015
 Other Contracts
o GAIL – Cheniere Energy 3.5 mmtpa supplies likely to commence in 2018
o GAIL-GAZPROM 2.5 mmtpa supplies to commence in 2020/21
o GSPC-BG 1.25 mmtpa with option of 1.25, supplies to commence in 2015

 Other Long Term Opportunities

 Middle-East : Qatar, Yemen : Shipping advantage for West Coast of India
 Australia : Large capacities: favourable for South & Eastern India
 Mozambique : Price, Logistically favourable
 Russia : Portfolio & price advantage
 US : Price Advantage (indexation to HH etc), portfolio
12
diversification
 KEY CHALLENGES OF INDIAN MARKET- DOMESTIC

 Large appetite with high Price sensitivity and

competition with alternate fuel
 Regulated power and fertilizer end use prices
 5th largest coal reserves
 Large consumption of liquid fuels like Diesel, FO
 Development of Infrastructure
 LNG terminals
 Domestic and transnational pipeline networks
 Gas storage
 Unbundling of transmission and marketing entities
 Consumers behavior
 Long term / short term/ Spot – how much to be
tied-up
13
 KEY CHALLENGES OF INDIAN MARKET- EXTERNAL

 Competition from Global buyers :

 Japan, Korea, Taiwan- high paying markets
 New emerging markets like China, Singapore,
Thailand
 India becoming a fall back market on spot basis
at right prices

 Large capital requirements for acquisition of

upstream assets and formation of strategic
partnership

 Multiplicity of index like JCC/Brent/Henry Hub with

no specific index for emerging markets
14
 LARGE DEMAND BUT SENSITIVE TO PRICE
McKinsey Analysis 2010
Gas demand and supply, 2015 388
mmscmd, At customer gate prices

311
276
59 230
171 19
25

1 2 3 4
2010 year Price of $16- Low Price of $13- Medium Price of $11- High Price of $8- Potential
end 17/ mmbtu 14/ mmbtu 12/ mmbtu 10 mmbtu demand,
consumption 2015

▪ Industries ▪ Refineries ▪ Peaking ▪ Baseload

Sectors with ▪ CNG ▪ Industries power power
demand transport ▪ Power plants ▪ New fertilizer
cogen plants

Imports
Domestic supplies
Prices at Crude of $ 100/Bbl

1 Based on estimated LNG supply of 8 mtpa in 2015 including RasGas (7.5 mtpa) and 1.5 mtpa from Gorgon LNG in 2015 15
SOURCE: Indianpetro; DGH; Company annual reports; Expert interviews; McKinsey analysis
 LARGE DEMAND BUT SENSITIVE TO PRICE
Petronet Analysis-2013
Petronet Analysis 2013
Gas demand and supply, 2016 358
mmscmd, at customer gate prices 55
85 275 303
228
28
143
32 47 202
119 147
53 72
40

156 156 156 156

103
1 2 3 4
2012 year Price of $19- Low Price of $16- Medium Price of $13- High Price of Potential
end 20/ mmbtu 17/ mmbtu 14/ mmbtu $11-12 demand,
consumption mmbtu 2015

▪ Industries ▪ Refineries ▪ Peaking ▪ Base load

Sectors with ▪ CNG ▪ Industries power power
demand transport ▪ New plants ▪ Existing
fertilizer fertiliser plants
plants
Imports
Domestic supplies
Prices at Crude of $ 110/Bbl

SOURCE: Vision 2030. PLL analysis 16

 WAY FORWARD

 Development of regional LNG/GAS index to cater growing

demand of emerging economies/ Indian sub continent
 Robust growth in Infrastructure development
 LNG Terminal
 Gas Storage
 Gas Pipelines on national & transnational basis
 Participation by global players in India’s infrastructure
development
 Government support & creation of Sovereign fund to handle stiff
global competition enabling acquisition of overseas upstream
assets in stiff competitive environment
 Consumers mindset in pricing, supply security needs to undergo
change : Market driven

17
 PETRONET TERMINALS

DAHEJ TERMINAL
 Commencement of Operations in 2004
 Capacity (mmtpa) : 5.0 10.0 15.0
 Truck Loading facility can handle 2500 loadings/ yr.
 LNG Cargoes unloaded: 1000+ cargoes

KOCHI TERMINAL
 Set up second LNG Terminal of 5.0 mmtpa capacity at Kochi,
State of Kerala.
 Tied up 1.44 mmtpa LNG from Exxon Mobil’s Gorgon Project
 Plant Mechanically completed, scheduled commissioning mid
2013

GANGAVARAM
 Pre Project activities started for the 3rd Terminal of 5 mmtpa
capacity at Gangavaram, State of Andhra Pradesh with
estimated investment of US$1 Billion.
18
DAHEJ TERMINAL – FACILITIES

19
 CATCHMENT REGIONS

Dahej LNG Gangavaram LNG

Terminal Terminal

Kochi LNG
Terminal
THANK YOU

KOCHI LNG TERMINAL

21