drivers for lng growth in india and shale gas
TRANSCRIPT
AF-Mercados EMI
Drivers for LNG growth in India and
Shale Gas
Carlos Barberán
LNG Service Leader AF-Mercados Energy Markets International
AF-Mercados EMI 2
Indian Gas markets vis-à-vis global markets in 2011
Source: BP Global Statistical Review of World Energy
India 2011
Germany
Japan
Brazil
USA
UK
China
2,000 4,000 6,000 8,000
10
20
30
40
0
Sh
are
of G
as (%
)
India (Next 5
yrs)
World Average:
1100 kg
World Average: 23.7%
Per Capita Energy Consumption (kgoe)
Bubble size denotes Primary Energy Consumption
AF-Mercados EMI 3
INDIA –A MAJOR GAS/LNG CONSUMER
•13th largest gas consumer–70BCM(~190MMSCMD)
•Economy increasing at CAGR of 7-8%pa with similar increase in
Energy Consumption
•6th largest LNG importer–16BCM (~44MMSCMD or 13.5MMTPA)
•Share of natural gas in Indian Energy basket to increase from
11% to 20% by 2025
•Despite increase in domestic gas production-dependency on
imported gas to increase substantially
•Pipeline network-developing into a nationalgrid-needs to grow
faster, connecting new markets
AF-Mercados EMI 4
National Gas Demand- Segment-wise
All figures in MMSCMD
Power and fertilizer sectors likely to continue the lead in driving the gas demand in India (~65%). However, refinery/petrochemical and city gas will emerge as a significant consumer of gas (~30%)
AF-Mercados EMI 5
INDIA‘s CURRENT GAS DEMAND & DOMESTIC SUPPLY SCENARIO
AF-Mercados EMI
Coal Supply – Issues
6
Domestic coal production has not kept pace with additional generation capacity
• During FY10, generation loss due to coal shortage was ~14.5 BUs; Till third quarter of FY11, the estimated generation loss is ~6 BUs
• Coal India Limited (CIL) has earmarked 306 MT for 67,872 MW – roughly 4.5 MT of coal per 1000 MW, for plants commissioned till 31 March ‘09
• Post 31 March ‘09, nearly 20000 MW* of capacity is expected to be commissioned requiring 90 MT of indigenous coal by the end of the XI Plan
However, for FY12, CIL has earmarked 319 MT for all thermal power plants in the country – a meager 13 MT for the new plants, a shortage of 77 MT for FY 12 leading to a stranded capacity of ~17000 MW
In view of inadequacy of domestic coal, FSA for plants commissioned after 31st March 2009 have not been signed and coal supply for these plants in being made through MoUs and adhoc arrangements
Fall out of coal deficit would be multifaceted:
• stranded power capacity and/or under utilization of capacity
• increasing cost of power generation due to imported coal
• strain on financial state of discoms
• potential impact on lenders
*5593 MW in FY10; 11,460 MW in FY11 and ~3000 MW in first three months of FY12
With a huge coal shortfall the country is facing a grim situation where power plants, commissioned/ready to be commissioned will lie stranded due to non availability of
domestic coal directly affecting country’s economic growth
AF-Mercados EMI
Gas Supply –Issues
7
Demand-Supply for
Power Sector (MMSCMD)
10-11 11-12 12-13 13-14
Current Demand 80.22 - - -
Current Supply 72.00 - - -
Un-served Demand 8.22 - - -
Additional demand
indicated by MoP
- 8.30 0 60.00
Total expected demand
requirement up to 2014
148.52
Volume
● Present natural gas supply to the power sector is 72 MMSCMD and present additional unserved demand is 8.22 MMSCMD*
● MoP has indicated an additional demand of around ~76.5 MMSCMD (inclusive of current unserved demand), thus resulting in total demand requirement by 2014 of 148.52 MMSCMD for Power Sector
* Source: Ministry report on allocation and pricing of natural gas dated December 2010
● Domestic Gas availability will be insufficient to meet demand for gas by the power sector considering limited visibility of future domestic gas supplies
● Of the total current supply of 169.03 MMSCMD (for all sectors), 72 MMSCMD is provided to power sector
● Gas supply is likely to increase to 248.98 MMSCMD (for all sectors) by 2014
● Assuming a similar percentage allocation, the gas available to power sector 106.06 MMSCMD, leaving a supply shortage of 42.46 MMSCMD by 2014
Considering the current percentage allocation gas to continue in future for the power sector, there would be a shortage of 42.46 MMSCMD of natural
gas by 2014 - LNG is the only option to fuel this demand
AF-Mercados EMI
Gas to Power demand (43%)
8
75.61
5
419129.72
19
21
22
24
27
29
32
35
Current Demand
Identified-12th Year
Plan
2018 2019 2020 2021 2022 2023 2024 2025 Total
Growth
Rate @ 9%
Identified
Demand
Future
Growth
Year 2025
Demand
Served
Unserved
Current
Demand
Greenfields/
Expansion projects
applied for Gas
Allocations
MM
SC
MD
Overall power demand
AF-Mercados EMI
Gas price for power: news!
The Oil Ministry is mulling a ban on the supply of
scarce domestically produced natural gas to merchant
power plants
As per the proposal, domestic natural gas, which is
available at one-third the price of imported LNG, will
only be supplied to companies that sell all power
produced from this gas at regulated tariffs
Domestic gas price (KG-D6): 4,2 $/MMBTU
Current Indian LNG spot price: 13-14 $/MMBTU
9
AF-Mercados EMI
Fertilizer sector demand (24%)
10
43.1
13
20350.76
67
78
89
910
10
11
11
Current Demand
Identified 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Total
Growth
Rate @ 6%
Identified
Demand
Future
Growth
Year 2025
Demand
Served
Unserved
Cu
rre
nt
De
ma
nd
Greenfields/
Expansion projects
Overall fertilizer demand
AF-Mercados EMI 11
Current and Proposed LNG Terminal
Future LNG terminals –advance stage
Current LNG terminals
Additional terminals/FSRU –nascent stage
AF-Mercados EMI 12
Proposed LNG terminals
Current operational LNG import capacity is 13.6 MMTPA
PLL Dahej terminal (10 MMTPA)
Shell Hazira terminal
Following depicts the projected LNG capacity growth in next five years
13.6
19.1
24.1 24.1
31.6
39.642.1
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
2011 2012 2013 2014 2015 2016 2017
Petronet Dahej Shell Hazira Petronet Kochi Dabhol Mundra Pipavav Ennore Total
Capacity (MMTPA)
AF-Mercados EMI 13
Large demand for LNG but sensitive to price
AF-Mercados EMI 14
Global LNG Trade in 2010 Indian LNG import to increase with
new planned and upcoming regas
capacities becoming operational
AF-Mercados EMI
Mid and Small scale off-shore + FLNG?
15
140 fields in Asia Pacific
Total Reserve >= 120 tcf
AF-Mercados EMI
Shale Gas?
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Source:IEA
AF-Mercados EMI
Shale Gas in India? Yes!
ONGC announces first shale gas discovery in
Asia: in West Bengal (India)
How will the Government consider this gas?
As domestic natural gas? And then only be
supplied to companies that sell all power produced
from this gas at regulated tariffs
At what cost? At what price?
17
AF-Mercados EMI
Current Drivers for growth in LNG
A substantial gap between demand and supplies to emerge in next 5 years
Indian consumers have realized the market dynamics and are ready to pay the market determined prices (at what max level?)
Indian majors do not have access to gas in the international market
The country is likely to be connected through Gas Grid which would widen the market for Gas/RLNG
Planning Commission (GOI) has targeted additional power generation of 10000 MW every year out of which 50% is likely to be based on gas
Indian consumers have become familiar with the peculiarities of LNG contracts
Shale Gas could be a new driver
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