Can India Deliver on its Promise of

LNG Demand Growth?

Abhishek Rohatgi Lead Analyst, South & Southeast Asia LNG Demand

Bloomberg New Energy Finance

0%

5%

10%

15%

20%

25%

30%

35%

-1% 4% 9% 14%

Share of gas in primary energy

GDP growth

China

India

World

South Korea

Japan

U.S.

Primary energy

demand

Gas has a low share in India’s energy mix

Natural gas’ share in primary

energy 2017, selected countries Gas demand, population and GDP per

capita in Asia, 2017

Source: World Bank, BP 2018 Statistical review Source: World Bank, BP 2018 Statistical review

1

10

100

1000

-1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5

GDP per capita ('00$)

China

Japan

Bangladesh

Pakistan

India

Vietnam

PhilippinesIndonesia

ThailandMalaysia

SingaporeAustralia

South Korea

Gas demand (bcm per million people)

Millionpeople

April 2, 2019

India’s gas market - a huge opportunity for industry?

Source: PTI, Bloomberg

April 2, 2019

India’s gas demand is supply constrained

Gas demand in India

14 15 16 15 16 15 15

18 17 16 16 15 16 18

6 6 6 5 5 7 9

2316

11 11 1112 12

0

10

20

30

40

50

60

70

FY2012 '13 '14 '15 '16 '17 '18

Bcmpa

Power City gas Industry Fertilizer

4640 35 33 31 31 33

1817

17 19 21 25 26

0

10

20

30

40

50

60

70

80

FY2012 '13 '14 '15 '16 '17 '18

Bcmpa

LNG imports Production

Gas supply in India

Source: Petroleum Planning and Analysis Cell Source: Petroleum Planning and Analysis Cell

April 2, 2019

Gas is no longer cost competitive in bulk generation

0

10

20

30

40

50

60

70

80

90

2018 2025 2030 2035 2040 2045 2050

$/MWh (real 2017)

Utility-scale PV Coal Onshore wind CCGT

0

10

20

30

40

50

60

70

80

90

2018 2025 2030 2035 2040 2045 2050

$/MWh (real 2017)

Utility-scale PV Coal Onshore wind CCGT

LCOE of new solar and wind vs

cost of new fossil plants in India

LCOE of new solar and wind vs cost of

running existing fossil plants in India

Source: BloombergNEF Source: BloombergNEF

April 2, 2019

But gas could be competitive in flexible generation

Source: BloombergNEF. Note: The LCOE range represents a range of costs and capacity factors. Battery storage systems (co-located and stand-alone) presented here have four-hour

storage. In the case of solar- and wind-plus-battery systems, the range is a combination of capacity factors and size of the battery relative to the power generating asset (25% to 100%

of total installed capacity). All LCOE calculations are unsubsidized. Categorization of technologies is based on their primary use case.

Levelized cost of electricity (LCOE) for India – 2H 2018

Bulk generation

Flexible generation

April 2, 2019

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

50

100

150

200

250

300

350

400

450

2015 2020 2025 2030 2035 2040 2045 2050

GW

Peaker gas Small-scale batteries

Utility-scale batteries Demand response

Other flexible capacity Share in total power mix

-

500

1,000

1,500

2,000

2,500

3,000

2014 2018 2022 2026 2030 2034 2038 2042 2046 2050

GW

Others Batteries Wind

Solar Peaker Gas Gas

Coal

Gas will provide ‘value’ but not ‘volume’ in power sector

Installed capacity in India Flexible capacity in India

Source: BloombergNEF Source: BloombergNEF

April 2, 2019

Gas is facing competition from electric vehicle in

transport sector

31%

25%

24%

20%

3.1Bcm

Three-wheeler

Passenger car

Bus

Taxi

Others

CNG consumption by vehicle

type in India, 2017

Timeline of EV cost parity versus CNG in India

Source: Petroleum Planning and Analysis Cell, India Source: BloombergNEF

April 2, 2019

Falling battery costs to make EV cheaper by late 2020s

Total cost of ownership (TCO) – Taxi Purchase price – taxis

Source: BloombergNEF

0

2

4

6

8

10

2017 18 '19 '20 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30

$cents per kilometer

Diesel

CNG

EV

0

4

8

12

16

20

24

2017 '18 '19 '20 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30

'000$

EV (Rest of Vehicle) EV (Battery)

Diesel CNG

Petrol

Source: BloombergNEF

April 2, 2019

0.0

1.9

3.8

5.7

7.6

9.5

0

2

4

6

8

10

2015 2018 2021 2024 2027 2030

Bcmpa

High

Base

Low

million NGV

CNG vehicle sales under pressure as electric vehicles grow

India’s gas demand from CNG vehicles (Low, base, high scenarios)

Source: BloombergNEF

BS VI is

implemented

EV sales start to

affect NGV

April 2, 2019

Industries consume most gas and LNG in India

LNG demand by sector, FY2018

Source: Petroleum Planning and Analysis Cell

0

10

20

30

40

50

60

70

FY2012 '13 '14 '15 '16 '17 '18

Bcmpa

Industry City gas Power

Source: Petroleum Planning and Analysis Cell. Note: ‘Industry’ includes fertilizer.

Gas demand in India

75%

15%

10%

19.5MMt

Industry City gas Power

April 2, 2019

Industry gas demand to increase 60% by 2030

32

7

6

6

51

0

10

20

30

40

50

60

FY2018 FY2030

Bcmpa

Refineries

Other industryFertilizer

Gas demand in industry in India

Source: BloombergNEF

April 2, 2019

Refineries to lead gas demand in industry sector

Under construction/planned pipeline

Under-construction LNG import terminal Operational LNG import terminal

Existing pipelineExisting refinery

Mundra

Dahej

Hazira

Kochi

Dhamra

Ennore

Dabhol

Jaigarh FSRU

New pipelines and LNG import

terminals will connect refineries

to gas supply

Jafrabad

Gas infrastructure and refinery map of India

Source: BloombergNEF, Petroleum Planning and Analysis Cell, Ministry of Petroleum and Natural Gas Source: The Hindu

April 2, 2019

Gas is needed to reduce air pollution in Indian cities

Source: Bloomberg

April 2, 2019

Gas use for industrial heating needs policy push

-12

-8

-4

0

4

8

12

0

4

8

12

16

20

24

FY2012 '14 '16 '18

Bcmpa $/MMBtu

Gas demand

LNG price – fuel oil price

LN

G p

rice

>

fuel

oil

price

LN

G p

rice

<

fuel

oil

price

Gas demand for industrial heating

and delivered fuel prices

Source: BloombergNEF, Petroleum Planning and Analysis Cell Source: Bloomberg

April 2, 2019

India LNG demand outlook

-

10

20

30

40

50

60

70

80

90

2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

MMtpa

Operational Under construction Planned

Proposed Demand Total contracts

India’s LNG demand, contracts and import terminals

Source: BloombergNEF April 2, 2019

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April 2, 2019