energy conclave 2006 presentation on multiparty interests in the gas sector 26 th july 2006
TRANSCRIPT
ENERGY CONCLAVE 2006
PRESENTATION
ON
MULTIPARTY INTERESTS IN THE GAS SECTOR
26TH JULY 2006
Presentation outline
• Indian Gas Sector – A Few Snap Shots
• Gas Sector Dynamics
• Issues
Indian Gas Sector – A Few Snap Shots
Indian Gas Industry
• Before 1995
• 1995 – 2004
• 2005 onwards
Three Distinct Phases:
Indian Gas Industry
Before 1995 :• All Sectors were controlled by Govt.
of India
• Administered Gas Price
• Only State Enterprises were involved
• Gas Sale was only to designated consumers
• Importance of clean fuel
• Acceptance of gas as ‘Green fuel’
Indian Gas Industry1995-2004 :
REFORM PERIOD• Acceleration of Industrial Growth
• Awareness on Energy efficiency measures
• Launch of NELP
• Import of gas under “OGL”
• Phased Dismantling of APM
• Increase in Gas Production
• Increasing Demand-Supply Gap
• Foreign participation up to 100%
• World class gas discovery in year 2002 in
KG basin
Indian Gas Industry
Beyond 2005•Market Driven Regime
• Implementation of PNRB Bill
•Gas Pipeline Policy
•City Gas Distribution Policy
•Cross Border Pipeline
•Monetization of CBM
•LNG Regasification terminal
•Procurement of LNG spot cargo
Gas Sector PlayersBEFORE 1995
1995 – 2004 2005 ONWARDS
UPSTREAM ONGC, OIL, ASSAM OIL
GAIL, IOCL, BPCL, GSPC, RELIANCE, HOEC, TATA PETRODYNE, ENPRO, SHELL, TOTALFINA, BRITISH GAS, BRITISH PETROLEUM, NIKO, CAIRN
GAIL, IOCL, BPCL, GSPC, RELIANCE, HOEC, TATA PETRODYNE, ENPRO, SHELL, TOTALFINA, BRITISH GAS, BRITISH PETROLEUM, NIKO, CAIRN
MIDSTREAM GAIL, ONGC, OIL
GAIL, OIL, GSPL / GSPC, GGCL, AGCL, TNGCL, GCGSCL
GAIL, GSPL, BG, OIL, GSPC, GGCL, AGCL, TNGCL, PLL, SHELL, RELIANCE ETC.
DOWNSTREAM GAIL, ASSAM GAS, GUJARAT GAS, AGCL
IOCL, HPCL, BPCL, MGL, IGL, GSPC, ONGC, SHELL, RELAINCE, BG ETC.
GAIL, IOC, BPCL, OIL, GSPC, ONGC, CAIRN, NIKO, SHELL, TOTALFINA, BG, RELIANCE, IGL, MGL ETC.
Gas Sector Regulation In India
Petroleum and Natural Gas Regulatory Board Act, 2006 enacted
REGULATIONS AND POLICIES TO PROMOTE INVESTMENTS AND COMPETITION
INDEPENDENT REGULATORY BOARD FOR DOWNSTREAM SECTOR
• Open Competitive Bidding• Non-discriminatory Open Access• Uniform Regulated Tariff
Storage, Regasification, Marketing of LNG / NG
• No Licensing ; Simple Registration• Free Market Price
• Open Competitive Bidding• Exclusivity Period
• 100 % FDI Permitted in- Pipelines/ LNG/ Marketing & Trading
• Fiscal Incentives Under Consideration- 0% Custom Duty on LNG imports- Infrastructure Status for Gas Pipeline
City Gas Distribution / CNG
Pipeline Transmission
Regulations to be guided by Govt. Policies
Gas Sector Dynamics
231185 166
313263
216
0
50
100
150
200
250
300
350
2006-07 2011-12
HV-2025 Optimistic ADB Gas Master Plan
HV-2025 Conservative
MMSCMD
Potential Demand Scenarios
India – Potential Growth Hub In Natural Gas Sector In The Region
Indian Natural Gas Scenario
MMSCMD
Indian Gas Industry
ONGC & OIL 40-45 55.0
Joint Ventures 0.0 21.0
Import of LNG 0.0 19.0
Total sale 40-45 95.0
In 1995 Present
CURRENT SUPPLY SCENARIO
SUPPLY AUGMENTATION AT COMPETITIVE PRICES CREATING INFRASTRUCTURE - KEY FOR DEVELOPING GAS MARKETS IN
INDIA
Estimates for 2011-2012
MMSCMD
Current fields 55
New Discoveries 40
CBM 10
Sub Total Domestic 105
LNG Import 60
Cross Border P/L 20
Total Supplies 185
Total Demand 300
Total Shortfall 115
Demand - Supply Gap
CHENNAI
KOLKATA
KAKINADA
DABHOL
PUNE
DAHEJ
VIJAIPUR
BHUBANESHWAR
VIZAG
TIRUCHCHIRAPALLI
HAZIRA
KOCHI
A 1 BLOCK, MYANMAR
KRISHNAPATTANAM
TURKMENISTAN
IRAN
MYANMAR
BANGLADESH
NEW GAS DISCOVERIES
LNG TERM’s- Upcoming
LNG TERM’s- Existing
TRANS – NATIONAL P/L
CBM
MUMBAI
JAMNAGAR
MANAPPAD
DAHEJ I & II
10 mmtpa*
HAZIRA2.5
mmtpa
DABHOL5 mmtpa
KOCHI5 mmtpa
Gas Supply Augmentation
LNG TO BECOME A SIGNIFICANT LONG-TERM SUPPLY SOURCE
LNG share to grow from 11% in 2005-06 to 38.4% by 2009-10
12.5 MMTPA of LNG already tied up for20-25 yrs
10 MMTPA of LNG to be tied up
LNG Supply Augmentation
Key Drivers For Emerging Market
• Govt. incentives
• Increase in Gas Production & LNG Import
• Import of gas through pipelines
• Development of CBM and Coal Gasification
• Regulatory Bill implementation
• Unbundling of transmission business
• Power Sector Reforms
• Concern for Environment
• Growth in Auto/City Gas Markets
LNGExisting (7.5 MMTPA)
Transmission PipelinesExisting (6,300 Kms)
JAGDISHPUR
PHOOLPUR
BHATINDA
JAMNAGAR
BAREILLY
DISPUR
DELHI
AGARTALA
BARODASURAT
KANPUR
LUCKNOW
PATNA
AHMEDABADRAJKOT
KOTA
MATHANIA
GWALIOR
VIJAIPUR
INDORE
UJJAIN
AGRA
KOLKATA
GAYA
BOKARO
VARANASIJHANSI
Iran-Pak-India Pipeline
Turk-Afg-Pak-India Pipeline
DAHEJ I & II10 mmtpa*
HAZIRA2.5 mmtpa
DABHOL5 mmtpa
COCHIN5 mmtpa
MYANMAR-India Pipeline
A 1 BLOCK, MYANMAR
Upcoming (15 MMTPA , US$ 1.5 Billion)
Planned (8,400 Kms, US$ 4.5 Billion)
City Gas/ CNGExisting (10 cities)
Planned (28 cities, US $ 2 Billion)Gas By Sea Receipt (Likely Location)
LNG Terminal
COIMBTORE
MANGLORE
MUMBAIBHUBANESHWAR
KRISHNAPATNAM
NELLORE
CHENNAI
TUTICORIN
TIRUCHCHIRAPALLI
PUNE
BHARUCH
DABHOL
HASANBANGLORE
KOLHAPURHYDERABAD
SOLAPUR
RAJAMUNDRY
VIJAYAWADA
DAMRA
KOCHI
KANJIRKKOD
TOTAL INVESTMENT – US$ 8 Billion
AURAIYA
GAS SECTOR INFRASTRUCTURE:
CURRENT AND FUTURE – A COMPOSITE PICTURE
Issues
Gas Pricing: The Changing Phases
PRICING – MOVING TOWARDS DEREGULATION
Future
• 60% Government
Controlled
- Power, Fertiliser,
Small Customers
• Multiple Prices (US$ 2 – 10 / MMBTU)
- NOC’s – Administered
- Private – Market Related
- RLNG – Market Related
• Free Market Pricing
• Competitive to alternatives
• Alignment with global trends
Present(2005-2006)
Past(Pre 2004)
• 100% Government
Controlled
• Single Price for
all users and sources
• Cost plus basis
Pricing Issues
• Demand for Gas is predominantly price sensitive
• Major gas consumers end product pricing is either regulated or highly price sensitive e.g. Power, Fertilizer
• Substantial gap in APM price ($ 1.75 - 2.10 / mmbtu) and market price ($3.00 - 9.00 / MMBTU)
• Gas price should not be under regulation which may dampen new exploration / market discoveries
• Selective consumer segments like domestic gas for Below Poverty Line (BPL) could be compensated through State instead of regulated gas pricing
Key IssuesUPSTREAM• Incentivize E&P
• Restructuring of PSC i.e. Recovery of cost petroleum
• Share of Profit Gas• Rationalisation of work commitment
• Infrastructure development for monetization of gas
MIDSTREAM•Gas Grid Development•Need for a realistic pricing•Development of gas trading hubs /
Storages
DOWNSTREAM•Long term supply commitment•Rationalisation of Tax / Levis
THANK YOU