ENERGY CONCLAVE 2006  PRESENTATION  ON  MULTIPARTY INTERESTS IN  THE GAS SECTOR 26 TH  JULY 2006
Presentation outline <ul><li>Indian Gas Sector – A Few Snap Shots </li></ul><ul><li>Gas Sector Dynamics </li></ul><ul><li>...
<ul><li>Indian Gas Sector </li></ul><ul><li>–  A Few Snap Shots </li></ul>
Indian Gas Industry <ul><ul><li>Before 1995 </li></ul></ul><ul><ul><li>1995 – 2004 </li></ul></ul><ul><ul><li>2005 onwards...
Indian Gas Industry <ul><li>Before 1995 : </li></ul><ul><li>All Sectors were controlled by Govt. of India </li></ul><ul><l...
Indian Gas Industry <ul><li>1995-2004 : </li></ul><ul><li>REFORM PERIOD </li></ul><ul><li>Acceleration of Industrial Growt...
Indian Gas Industry <ul><li>Beyond 2005 </li></ul><ul><ul><ul><li>Market Driven Regime </li></ul></ul></ul><ul><ul><ul><li...
Gas Sector Players GAIL, IOC, BPCL, OIL, GSPC, ONGC, CAIRN, NIKO, SHELL, TOTALFINA, BG, RELIANCE, IGL, MGL ETC. IOCL, HPCL...
Gas Sector Regulation In India <ul><li>Petroleum and Natural Gas Regulatory Board Act, 2006 enacted </li></ul>REGULATIONS ...
<ul><li>Gas Sector Dynamics </li></ul>
Indian Natural Gas Scenario MMSCMD Potential Demand Scenarios India – Potential Growth Hub In Natural Gas Sector In The Re...
Indian Gas Industry MMSCMD CURRENT SUPPLY SCENARIO ONGC & OIL 40-45 55.0 Joint Ventures   0.0 21.0 Import of LNG   0.0 19....
SUPPLY AUGMENTATION AT COMPETITIVE PRICES CREATING INFRASTRUCTURE - KEY FOR DEVELOPING GAS MARKETS IN INDIA Demand - Suppl...
Gas Supply Augmentation CHENNAI KOLKATA KAKINADA DABHOL PUNE DAHEJ VIJAIPUR BHUBANESHWAR VIZAG TIRUCHCHIRAPALLI HAZIRA KOC...
LNG Supply Augmentation LNG TO BECOME A SIGNIFICANT LONG-TERM SUPPLY SOURCE  <ul><li>LNG share to grow from 11% in 2005-06...
Key Drivers For Emerging Market <ul><li>Govt. incentives </li></ul><ul><li>Increase in Gas Production & LNG Import  </li><...
GAS SECTOR INFRASTRUCTURE: CURRENT AND FUTURE –  A COMPOSITE PICTURE JAGDISHPUR PHOOLPUR BAREILLY DISPUR SURAT PATNA AHMED...
<ul><li>Issues </li></ul>
Gas Pricing: The Changing Phases PRICING – MOVING TOWARDS DEREGULATION Future  <ul><li>60% Government  </li></ul><ul><li>C...
Pricing Issues <ul><li>Demand for Gas is predominantly price sensitive </li></ul><ul><li>Major gas consumers end product p...
Key Issues <ul><li>UPSTREAM </li></ul><ul><li>Incentivize E&P  </li></ul><ul><ul><li>Restructuring  of PSC i.e. Recovery o...
THANK YOU
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ED, GAIL

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ED, GAIL

  1. 1. ENERGY CONCLAVE 2006 PRESENTATION ON MULTIPARTY INTERESTS IN THE GAS SECTOR 26 TH JULY 2006
  2. 2. Presentation outline <ul><li>Indian Gas Sector – A Few Snap Shots </li></ul><ul><li>Gas Sector Dynamics </li></ul><ul><li>Issues </li></ul>
  3. 3. <ul><li>Indian Gas Sector </li></ul><ul><li>– A Few Snap Shots </li></ul>
  4. 4. Indian Gas Industry <ul><ul><li>Before 1995 </li></ul></ul><ul><ul><li>1995 – 2004 </li></ul></ul><ul><ul><li>2005 onwards </li></ul></ul>Three Distinct Phases:
  5. 5. Indian Gas Industry <ul><li>Before 1995 : </li></ul><ul><li>All Sectors were controlled by Govt. of India </li></ul><ul><li>Administered Gas Price </li></ul><ul><li>Only State Enterprises were involved </li></ul><ul><li>Gas Sale was only to designated consumers </li></ul><ul><li>Importance of clean fuel </li></ul><ul><li>Acceptance of gas as ‘Green fuel’ </li></ul>
  6. 6. Indian Gas Industry <ul><li>1995-2004 : </li></ul><ul><li>REFORM PERIOD </li></ul><ul><li>Acceleration of Industrial Growth </li></ul><ul><li>Awareness on Energy efficiency measures </li></ul><ul><li>Launch of NELP </li></ul><ul><li>Import of gas under “OGL” </li></ul><ul><li>Phased Dismantling of APM </li></ul><ul><li>Increase in Gas Production </li></ul><ul><li>Increasing Demand-Supply Gap </li></ul><ul><li>Foreign participation up to 100% </li></ul><ul><li>World class gas discovery in year 2002 in KG basin </li></ul>
  7. 7. Indian Gas Industry <ul><li>Beyond 2005 </li></ul><ul><ul><ul><li>Market Driven Regime </li></ul></ul></ul><ul><ul><ul><li>Implementation of PNRB Bill </li></ul></ul></ul><ul><ul><ul><li>Gas Pipeline Policy </li></ul></ul></ul><ul><ul><ul><li>City Gas Distribution Policy </li></ul></ul></ul><ul><ul><ul><li>Cross Border Pipeline </li></ul></ul></ul><ul><ul><ul><li>Monetization of CBM </li></ul></ul></ul><ul><ul><ul><li>LNG Regasification terminal </li></ul></ul></ul><ul><ul><ul><li>Procurement of LNG spot cargo </li></ul></ul></ul>
  8. 8. Gas Sector Players GAIL, IOC, BPCL, OIL, GSPC, ONGC, CAIRN, NIKO, SHELL, TOTALFINA, BG, RELIANCE, IGL, MGL ETC. IOCL, HPCL, BPCL, MGL, IGL, GSPC, ONGC, SHELL, RELAINCE, BG ETC. GAIL, ASSAM GAS, GUJARAT GAS, AGCL DOWNSTREAM GAIL, GSPL, BG, OIL, GSPC, GGCL, AGCL, TNGCL, PLL, SHELL, RELIANCE ETC. GAIL, OIL, GSPL / GSPC, GGCL, AGCL, TNGCL, GCGSCL GAIL, ONGC, OIL MIDSTREAM 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 ONGC, OIL, ASSAM OIL UPSTREAM 2005 ONWARDS 1995 – 2004 BEFORE 1995
  9. 9. Gas Sector Regulation In India <ul><li>Petroleum and Natural Gas Regulatory Board Act, 2006 enacted </li></ul>REGULATIONS AND POLICIES TO PROMOTE INVESTMENTS AND COMPETITION INDEPENDENT REGULATORY BOARD FOR DOWNSTREAM SECTOR <ul><li>Open Competitive Bidding </li></ul><ul><li>Non-discriminatory Open Access </li></ul><ul><li>Uniform Regulated Tariff </li></ul>Storage, Regasification, Marketing of LNG / NG <ul><li>No Licensing ; Simple Registration </li></ul><ul><li>Free Market Price </li></ul><ul><li>Open Competitive Bidding </li></ul><ul><li>Exclusivity Period </li></ul><ul><li>100 % FDI Permitted in </li></ul><ul><ul><li>- Pipelines/ LNG/ Marketing & Trading </li></ul></ul><ul><li>Fiscal Incentives Under Consideration </li></ul><ul><ul><li>0% Custom Duty on LNG imports </li></ul></ul><ul><ul><li>Infrastructure Status for Gas Pipeline </li></ul></ul>City Gas Distribution / CNG Pipeline Transmission <ul><li>Regulations to be guided by Govt. Policies </li></ul>
  10. 10. <ul><li>Gas Sector Dynamics </li></ul>
  11. 11. Indian Natural Gas Scenario MMSCMD Potential Demand Scenarios India – Potential Growth Hub In Natural Gas Sector In The Region
  12. 12. Indian Gas Industry MMSCMD CURRENT SUPPLY SCENARIO 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
  13. 13. SUPPLY AUGMENTATION AT COMPETITIVE PRICES CREATING INFRASTRUCTURE - KEY FOR DEVELOPING GAS MARKETS IN INDIA Demand - Supply Gap 115 Total Shortfall 300 Total Demand 185 Total Supplies 20 Cross Border P/L 60 LNG Import 105 Sub Total Domestic 10 CBM 40 New Discoveries 55 Current fields MMSCMD   Estimates for 2011-2012
  14. 14. Gas Supply Augmentation 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 DABHOL 5 mmtpa KOCHI 5 mmtpa DAHEJ I & II 10 mmtpa* HAZIRA 2.5 mmtpa
  15. 15. LNG Supply Augmentation LNG TO BECOME A SIGNIFICANT LONG-TERM SUPPLY SOURCE <ul><li>LNG share to grow from 11% in 2005-06 to 38.4% by 2009-10 </li></ul><ul><li>12.5 MMTPA of LNG already tied up for 20-25 yrs </li></ul><ul><li>10 MMTPA of LNG to be tied up </li></ul>
  16. 16. Key Drivers For Emerging Market <ul><li>Govt. incentives </li></ul><ul><li>Increase in Gas Production & LNG Import </li></ul><ul><li>Import of gas through pipelines </li></ul><ul><li>Development of CBM and Coal Gasification </li></ul><ul><li>Regulatory Bill implementation </li></ul><ul><li>Unbundling of transmission business </li></ul><ul><li>Power Sector Reforms </li></ul><ul><li>Concern for Environment </li></ul><ul><li>Growth in Auto/City Gas Markets </li></ul>
  17. 17. GAS SECTOR INFRASTRUCTURE: CURRENT AND FUTURE – A COMPOSITE PICTURE JAGDISHPUR PHOOLPUR BAREILLY DISPUR SURAT PATNA AHMEDABAD RAJKOT UJJAIN AGRA JHANSI NELLORE TOTAL INVESTMENT – US$ 8 Billion AURAIYA LNG Existing (7.5 MMTPA) Transmission Pipelines Existing (6,300 Kms) BHATINDA JAMNAGAR DELHI AGARTALA BARODA KANPUR LUCKNOW KOTA MATHANIA GWALIOR VIJAIPUR INDORE KOLKATA GAYA BOKARO VARANASI Iran-Pak-India Pipeline Turk-Afg-Pak-India Pipeline DAHEJ I & II 10 mmtpa* HAZIRA 2.5 mmtpa DABHOL 5 mmtpa COCHIN 5 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/ CNG Existing (10 cities) Planned (28 cities, US $ 2 Billion) Gas By Sea Receipt (Likely Location) LNG Terminal COIMBTORE MANGLORE MUMBAI BHUBANESHWAR KRISHNAPATNAM CHENNAI TUTICORIN TIRUCHCHIRAPALLI PUNE BHARUCH DABHOL HASAN BANGLORE KOLHAPUR HYDERABAD SOLAPUR RAJAMUNDRY VIJAYAWADA DAMRA KOCHI KANJIRKKOD
  18. 18. <ul><li>Issues </li></ul>
  19. 19. Gas Pricing: The Changing Phases PRICING – MOVING TOWARDS DEREGULATION Future <ul><li>60% Government </li></ul><ul><li>Controlled </li></ul><ul><li>- Power, Fertiliser, </li></ul><ul><li>Small Customers </li></ul><ul><li>Multiple Prices (US$ 2 – 10 / MMBTU) </li></ul><ul><li>NOC’s – Administered </li></ul><ul><li>Private – Market Related </li></ul><ul><li>RLNG – Market Related </li></ul><ul><li>Free Market Pricing </li></ul><ul><li>Competitive to alternatives </li></ul><ul><li>Alignment with global trends </li></ul>Present (2005-2006) Past (Pre 2004) <ul><li>100% Government </li></ul><ul><li>Controlled </li></ul><ul><li>Single Price for </li></ul><ul><li>all users and sources </li></ul><ul><li>Cost plus basis </li></ul>
  20. 20. Pricing Issues <ul><li>Demand for Gas is predominantly price sensitive </li></ul><ul><li>Major gas consumers end product pricing is either regulated or highly price sensitive e.g. Power, Fertilizer </li></ul><ul><li>Substantial gap in APM price ($ 1.75 - 2.10 / mmbtu) and market price ($3.00 - 9.00 / MMBTU) </li></ul><ul><li>Gas price should not be under regulation which may dampen new exploration / market discoveries </li></ul><ul><li>Selective consumer segments like domestic gas for Below Poverty Line (BPL) could be compensated through State instead of regulated gas pricing </li></ul>
  21. 21. Key Issues <ul><li>UPSTREAM </li></ul><ul><li>Incentivize E&P </li></ul><ul><ul><li>Restructuring of PSC i.e. Recovery of cost petroleum </li></ul></ul><ul><ul><li>Share of Profit Gas </li></ul></ul><ul><ul><li>Rationalisation of work commitment </li></ul></ul><ul><li>Infrastructure development for monetization of gas </li></ul><ul><li>MIDSTREAM </li></ul><ul><li>Gas Grid Development </li></ul><ul><li>Need for a realistic pricing </li></ul><ul><li>Development of gas trading hubs / Storages </li></ul><ul><li>DOWNSTREAM </li></ul><ul><li>Long term supply commitment </li></ul><ul><li>Rationalisation of Tax / Levis </li></ul>
  22. 22. THANK YOU
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