The document summarizes key facts about India's natural gas sector: 1) Natural gas currently accounts for 6% of India's primary energy mix but the government aims to increase this to 15% by 2030. 2) India is planning significant new LNG import terminal capacity and pipeline infrastructure to support increasing gas consumption. 3) City gas distribution is emerging as a key driver of growth in gas demand in India through expansion of CNG and PNG networks.

1. Natural Gas in India

2. Key Facts – Natural Gas Sector in India
Today about 6% share in primary
energy mix; government targets to
increase it to 15% by 2030
Several new LNG capacity
addition being planned; from current
capacity of ~31.0 MTPA to 78MTPA
in 2021-22
50-50% share of LNG and
domestic gas in overall
consumption in 2017-18
50% of current consumption
from prime consuming sectors Power
and Fertilizer, declining or stagnating
CGD and industrial use growing sectors
and likely to emerge as key drivers.
Existing pipeline connectivity of
over 16,000 km; plans to
increase to over 30,000 km

3. The 15% Vision
• Current gas share in energy mix
India 6.2% World average 23%
• Per capita gas consumption
India 35 SCM World 441 SCM
For 15% gas share, gas consumption needs to quadruple by 2030

4. Increasing infrastructure to support the 15% vision
• Pipeline length/capacity
~17000 km/ 374 MMSCMD
• Additional 15000 km
pipeline coming up
• Sufficient to handle about
three times current
consumption

5. LNG driving consumption; pricing holds the key
• LNG imports rising 50% of consumption
• LNG regas capacity current 31 MMTPA
to increase to 60-70 MMTPA
• Most additionally capacity planned along East Coast
27
65
78
0
20
40
60
80
100
2017-18 2019-20 2021-22
LNG Capacity (MMTPA)

6. Rising gas consumption supporting the 15% vision
• 15% growth in gas consumption since
2014-15 ~ 145 MMSCMD
• Shift in consumption pattern away from
conventional segments
• CGD now the fastest growing segment,
holds the most potential
• Refinery and petrochemicals are other
two small but rising segments

7. • 17% share in overall consumption at 24 MMSCMD
• Over 100 % increase in no. of GAs (179) in last two
years
• Over 50% in no. of CNG stations (1528) since 2014-15
• About 30% increase in no. of CNG vehicles since 2014-15
at 3.26 million
• About 65% increase in PNG connections since 2014-15 at
4.81 million
• CNG PNG almost equal consuming segments in sales at
45: 55
CGD Prime Growth Driver of Gas Consumption

8. Gas demand would depend on …
• Marketing and pricing freedom for
natural gas
• Hydrocarbon Exploration Licensing
Policy (HELP)
• Setting-up of Natural Gas Trading
Exchange
• Ban on polluting fuels such as
petcoke and FO
• Promotion of CNG/ LNG vehicles

9. Source: PPAC
 Declining domestic gas production is being complemented by increasing LNG imports to meet the current demand level
 India has 5 operating LNG Terminals importing about 20 MTPA. 11 additional terminals are being planned which will take the regas capacity
to 78 MTPA by 2022-23
Gas production / consumption / imports (mmscmd)
LNG imports rising with declining production

10. LNG Infrastructure in India
Source: KPMG Analysis

11. Pipeline Infrastructure in India
Gujara
t CGDs
Legends
Existing Pipelines
Under Cons. P/L – work
under progress
Approved P/L – work
yet to start
Existing LNG Terminal
Proposed LNG Terminal
CGD Network
Proposed CGD Network
(105 Nos.) on GAIL PLs
 Authorisation granted for additional
14,500 Kms of new gas pipelines
Gas pipeline network (as on 1.1.2019)
Total Length (km) 16793
Capacity (mmscmd) 374
Average flow during Apr-Sep 2018 (mmscmd) 293.4
Capacity utilisation during 2017-18 (%) 79.73

12. Sector Wise Natural Gas Consumption in India
 The natural gas consumption
in the country has been tepid
in last 5-7 years.
 Except for petrochemical and
CGD sector the consumption
of natural gas has not
witnessed a steady trend.
 Power, fertilizer, CGD,
Refinery and petrochemical
sector contributes to ~85 - 87
percent of the total gas
consumed in the country.
Historical Gas Consumption (MMSCMD)
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18
Power 62 44 31 29 30 32 33
Fertiliser 38 40 43 42 44 42 40
CGD 15 16 16 15 15 20 24
Refinery 12 11 11 13 14 15 18
Petrochemical 5 7 7 8 10 11 11
Sponge iron 4 3 1 0 1 2 4
Industrial 1 1 0 1 1 2 2
Misc 29 26 25 20 15 14 13
Total 166 148 134 128 131 139 145
Sector-wise Gas Consumption (2017-18): 144.75 MMSCMD

13. CGD to be primary growth driver of gas
 Clearly the sector has grown, both geographically and in volume terms. The significant growth in the sector has been largely due to government
initiatives with the CGD sector (CNG and PNG for residential) being accorded the highest priority for allocation of domestic gas.
 With 179 GAs now and 10th round with 50 more areas is on offer, the coming years should see lot of investment in the CNG and PNG
infrastructure. The sector is pegged to see an investment of Rs 70, 000 crore.
CGD growth story
2011-
12
2012-
13
2013-
14
2014-
15
2015-
16
2016-
17
2017-
18
Jan
19
Total gas consumption by CGD
(mmscmd) 15.34 15.84 16.18 14.84 14.97 21.19
24
25
CNG Sales 6.46 7.17 7.61 8.04 8.5 9.33 10.5
PNG consumption 8.88 8.67 8.57 6.8 6.47 11.86 13.5
domestic 1.779 -
ind/com 10.081
-
Number of GAs 52 64 78 93 179
CNG Stations (at March end) 1010 1081 1233
1424
1528
CNG Vehicles (million) 2.55 2.56 3.05 3.09 3.26
PNG Connections (million) 2.94 3.16 3.62
4.32
4.81
Source: MoPNG, PPAC

14. Maharashtra, Goa,
Gujarat, Rajasthan,
Delhi NCR, Haryana,
Punjab, MP, etc
Present
Future

15. PROMOTING USE OF CNG – DEVELOPING THE INFRASTRUCTURE
80% of CNG Cluster
in Maharashtra,
Gujarat & Delhi-NCR
LNG Terminals
Existing CGD
Areas

16. Key Drivers for Gas Demand in India
 Marketing and pricing freedom for natural gas
• Marketing and pricing freedom to sell at arm’s length price in the domestic market for oil and gas produced from
acreages awarded under OAL (HELP) and DSF regime
1) Upstream – Investment Reforms
 Hydrocarbon Exploration Licensing Policy (HELP)
• The salient features of the policy are Open Acreage Licensing (OAL), single uniform license for conventional and
unconventional hydrocarbons, simpler and easier revenue sharing contract, full freedom for marketing and market
pricing for crude oil and natural gas and Low royalty rates.
2) Downstream - Market Reforms
 Setting-up of Natural Gas Trading Exchange
• The government has announced setting up of a gas trading exchange in the country which will enable transparent
price discovery and enable small consumers source gas as per their consumption requirement, moving away from the
current rigid gas contracts
3) Clean and Sustainable Energy Reforms
 Ban on polluting fuels such as petcoke and FO
• The government has banned usage of petcoke and FO in northern states of the country
 Promotion of CNG/ LNG vehicles
• In order to facilitate early roll-out of CNG/ PNG network in country, Government has accorded prioritized domestic gas
allocation to meet the full gas requirement of CNG and PNG (Domestic) consumer segments

17. Indian market deregulation
Indian Gas Market is highly regulated. The gas market is regulated by the Petroleum and Natural Gas
Regulatory Board (PNGRB). It was established in 2006 to regulate the refining, processing, storage,
transportation, distribution, marketing and sale of petroleum, petroleum products and natural gas so as to
protect consumer interest, ensure uninterrupted and adequate supply and promote competitive markets. The
key functions of the Board are –
• Authorize entities to lay, build, expand or operate pipelines and city gas distribution networks (CGD)
• Determination of tariffs for transportation of gas in common or contract carrier pipelines and CGDs
• Regulate access to pipelines and CGD as per access code, for fair trade and fostering competition
amongst operating entities
• Formulate and enforce service obligation for marketing entities
• Prevention of restrictive trade practices
• Formulation of technical standards and safety norms for construction and operation of gas
infrastructure and ensuring compliance by all entities
• Complaint and dispute resolution
• Maintain a data bank of information on activities relating to petroleum, petroleum products and
natural gas

18. Indian market deregulation…
• Currently, the gas produced in India has a variety of different prices at the wellhead and the pricing is primarily segmented under three
broad regimes: Nomination regime (also known as the Administered Pricing Mechanism or ‘APM’), Discovered Fields regime (also known
as the Pre-New Exploration Licensing Policy regime or ‘Pre-NELP’), and the New Exploration Licensing Policy (NELP).
 The Government is making efforts
to provide marketing and pricing
freedom to the gas that would be
produced from the new gas field
ensuring the gas produces a fair
price of the gas produced and at
the same time ensuring that the
end consumers get the gas at
affordable rates

19. Gas prices in India/International
 Gas prices have been rising, both
domestically and internationally
 They have to compete with alternate
fuels in the consuming sectors.
 Domestically, gas competes very well
with alternate fuels in transport and
industrial sectors.
5.05 4.66
3.82
3.06 2.5 2.48 2.89 3.06 3.36
0 0 0
6.61
5.3 5.56 6.3 6.78
7.67
0
5
10
Nov 14-Mar 15 Oct 15-Mar 16 Oct 16-Mar 17 Oct 17-Mar-18 Oct 18-Mar 19
Domestic gas price ($/mmbtu)
Domestic gas price (GCV basis)
Price cap for deepwater, ultra deepwater, high temp high pressure areas
0.00
20.00
Oct-17Nov-17Dec-17 Jan-18 Feb-18Mar-18Apr-18May-18Jun-18 Jul-18 Aug-18Sep-18 Oct-18Nov-18Dec-18
Oct-17
Nov-
17
Dec-17 Jan-18 Feb-18
Mar-
18
Apr-18
May-
18
Jun-18 Jul-18
Aug-
18
Sep-18 Oct-18
Nov-
18
Dec-18
Eurpoean spot Indictaor 5.96 6.92 7.90 7.05 7.35 7.38 7.13 7.42 7.32 7.53 8.76 9.47 8.76 8.28 8.16
Henry Hub 2.88 2.98 2.78 3.66 2.66 2.66 2.76 2.77 2.94 2.81 2.94 2.95 3.23 4.05 4.21
East Asian Delivered LNG indicator 8.15 8.23 8.73 9.87 9.35 8.82 8.74 8.96 9.11 9.47 9.85 10.14 10.82 9.96 9.41
Japan LNG contract price 8.20 9.00 10.20 11.00 10.60 8.80 9.10 8.20 9.30 10.00 10.70 10.60 10.70 10.80
International Gas/LNG prices ($/mmbtu)