giic 2016-alok k. roy, sr. manager, indian oil corporation
TRANSCRIPT
Gas Marketing and Trading in IndiaGas Demand Forecast- Impact of Low prices & Contract Review
Alok K Roy, Sr Manager,
Business Development(Gas)
Corporate Office, New Delhi22nd July 2016
Natural Gas – World Overview
Indian Gas Market
Gas Market Development – Imperatives
Gas Price and Demand
Natural Gas Infrastructure in India
Remedy
Contents
Natural Gas – World Overview
3
Gas – A Cleaner Alternative
Source : BP Statistical Review of World Energy June 2016 & IEP
World
2015
India
2030 By energy source, gas to
account for the largest increase
in world primary energy
consumption
To act as bridge between Fossil
Fuel and Renewable Energy
To challenge
• Oil in Transport Fuels &
Domestic Households
• Coal in Power Generation
Has a large resource base to
support growth through 2040
and beyond.
BRICS Nations – A Comparison
Year Brazil Russia India China South Africa
2004 102 2706 30 32 46
2008 130 2931 36 63 77
2010 137 2899 51 83 77
2012 159 2907 47 112 84
2014 195 2864 40 138 92
2015 197 2717 39 144 91
Source: BP Statistics 2016 & World Bank Population Data
Per Capita Natural Gas Consumption (Cubic Meter)
5Gap – 104 MMTPA
Indian Natural Gas Market 6
Indian Growth Scenario – Gas & Oil (% & Mtoe)
Source : BP Statistical June 2016
119 128145 155
174 181 196
29 34 3755 52 46 46
2004 2006 2008 2010 2012 2014 2015
81 79 79 74 77 80 81
19 21 21 26 23 20 19% Share
(Oil + Gas)
Mtoe
Gas
Oil
Gas
Oil
at peak of KG D6 Production
Gas readily substitutes liquid fuels when there are no availability
constraints
Gas Growth Scenario – Domestic & LNG (% & MMT)
Source : BP Statistical June 2016
22.2 22.3 23.2
37.5
29.523.1 22.2
2.06.1 8.4 9.3
14.3 15.4 16.3
2004 2006 2008 2010 2012 2014 2015
9279 74 80
67 60 58
821 26 20
33 40 42% Share
MMT
LNG
Domestic
LNG
Domestic
LNG imports continue to increase - Limited only by infrastructure
constraints (Terminal & Pipeline connectivity)
9
Gas Prices and Demand
GAS PRICING
Domestic Gas
Notified by GoI., Revised every 6 Months.
Linked to weighted average of Global prices – Henry Hub, Alberta Hub, NBP UK & Russia Gas Price.
Imported LNG
Market determined
Based on type of Contract
Long Term / Short Term / Spot
10
NATURAL GAS MARKET DEVELOPMENT :IMPERATIVES
Availability
Domestic
Imported - RLNG
Spot/ Short/ Medium/ Long Term
Trans-border pipeline
Accessibility
Gas Pipelines
LNG Terminals
Affordability
Demand Projections - Un Constrained
114 136 152 177 20157
71104
107111
76
93
99106
118
24
33
4251
63
60
67
68
73
73
26
26
26
29
33
0
100
200
300
400
500
600
700
FY16 FY18 FY20 FY22 FY25
Petchem
Refinery
CGD
Industry
Fertilizer
Power
357
426
491
543
599
Source : CRISIL Report for IndianOIl
MMSCMD
Effect of Price on Demand
5971
4429
3631
40
42
79
16
15
24
11
13
2021 27
22
0
20
40
60
80
100
120
140
160
2009-10 2010-11 2012-13 2014-15
Others
Sponge Iron
Petrochemical
Refinery
CityGas Distribution
Fertilzer
Power
Power Sector consumption fell due to drop in domestic gas production
LNG failed to grab the demand due to higher prices and infrastructure
limitations
Source : PPAC, Infraline
Sector Wise Natural Gas Consumption: April, 2016
43
3219
43
1
138 MMSCMD
23
26
11
10 0
20
68
33
1
Domestic - 71 MMSCMD
LNG - 67 MMSCMD
Fertilizer
PowerCGD
Petrochemicals/
Refineries &
Others
Sponge Iron
Fertilizer
Power
CGD
Petrochemicals/
Refineries & Others
Sponge Iron
Fertilizer
Power
CGD
Petrochemicals/
Refineries & Others
Sponge Iron
Source : PPAC, Infraline
Higher prices kept LNG share lowest in Power
Sector
0
20
40
60
80
100
120
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
2011 2012 2013 2014 2015 2016 (till May)
Japan LNG CIF NBP, UK Henry Hub JCC Brent
15
Drop in Global Gas prices
Source: WoodMac LNG Tool – May, 2016 and BP Statistics - June, 2015. 2016 figures are approximate.
$/MMBTU$/BBL
Global LNG Demand Supply Balance: (MMTPA)
255
322
369
421
512
564
329
413
622
672
623
395
521 520
467
200
300
400
500
600
700
2016 2018 2020 2025 2030 2035
LNG Demand
LNG Supply (Possible + Speculative)
LNG Supply (Possible)
Source: WoodMac LNG Tool. Apr. 2016
More than 100 MMTPA of LNG Terminals under construction in US & Australia
LNG Market is expected to be surplus till 2025
Contract Price Reviews
Drop in spot / short term prices triggered
Long Term Contract price renegotiations
PLL – RasGas renegotiated Long Term
LNG Prices resulting in fall of prices from
12$/mmbtu in Dec., 2015 to 6$/MMBTU
in Jan., 2016
CNPC has reportedly taken up price
revision in its Long Term Contract with
Qatar.
PLL is taking up revision of its Gorgon
Long Term Contract.
LNG prices are expected to be
depressed till 2020 even if oil prices
recovered.
14.5
13.8
13.5
12.8
12.5
2012 2013 2014 2015 2016
Drop in Speculative LNG Price slope
Impact on Demand
18
In contrast to rest of the World, India’s Gas Consumption dropped in recent
past due to constraints in gas infrastructure and high LNG Prices
Recent drop in LNG Prices had made Gas affordable in all the sectors including
Power Sector.
This was evident in the March, 2016 e-tender for Power Plants where
companies quoted negative bid for subsidy from Power System Development
Fund
Import Infrastructure constraints are also expected to be resolved sooner with
expansion of PLL Dahej Terminal and completion of new Terminals in West and
East coast.
With environmental and economical benefit in using Gas, demand is expected
to grow in coming years.
Natural Gas Infrastructure in India
20
Terminal 2017 2022 2030
Dahej 15.0 15.0 20.0
Hazira 5.0 5.0 10.0
Dabhol 2.0 5.0 5.0
Kochi 5.0 5.0 5.0
Mundra 5.0 7.5
Ennore 5.0 10.0
Jafrabad 5.0 10.0
Kakinada 6.5 6.5
Dhamra 5.0 5.0
Jaigarh 5.0 5.0
27 50 70
Kochi
Ennore
Dabhol
Hazira
Dahej
Mundra
Jaigarh Kakinada
Dhamra
Operational
Under Construction
Proposed
Under Planning
Indian LNG Terminals (Existing & Proposed)
inMMTPA
Jafrabad
20
Existing
Transmission Pipelines
Existing – GAIL & GSPL
Upcoming
GAIL’s Planned Pipeline
RIL’s East West Pipeline
Pipelines awarded by PNGRB
LNG Terminal
INTEGRATED GRID TO LINK ANY SOURCE TO ANY MARKET
JAGDISHPUR
PHOOLPUR
BHATINDA
BAREILLY
DISPUR
DELHI
AGARTALA
BARODA
LUCKNOW
PATNA
AHMEDABAD
RAJKOT
KOTA
MATHANIA
GWALIOR
UJJAIN
AGRA
KOLKATA
GAYA
BOKARO
JHANSI
DAHEJ
15 mmtpa
HAZIRA
5 mmtpa
COIMBTORE
MUMBAI BHUBANESHWAR
NELLORE
CHENNAI
TUTICORIN
TIRUCHCHIRAPALLI
HASANBANGLORE
KOLHAPUR
SOLAPUR
KAKINADA
(MALLAVARAM)
DABHOL
5 mmtpa
KANJIKKOD
AURAIYA
GOA
CUTTACK
VIJAYPUR
KANPUR
NANGAL
GURGAUN
PUNE
BHARUCH
SURAT
HYDERABAD
RAJAMUNDRY
BHOPAL
KOCHI
5 mmtpa
BARMER
Natural Gas Pipelines – An Emerging Grid
BHILWARA
SRINAGAR
jAMMU
MEHSANA
PARADIP
RAIPUR
NAGPUR
JALGAON
Bidding stageSRIKAKULAM
EOI stage
Gas Demand Projections VsExpected Domestic Gas & Import Capacity
126 132 138 158 149
104132
167177 177
30 30
357
426
491
543
599
0
100
200
300
400
500
600
700
FY16 FY18 FY20 FY22 FY25
Pipeline Imports Import Capacity Gas Supply Gas Demand
Source : CRISIL Report for IndianOIl
MMSCMD
Gas Pipeline Density Km / 100 Sq Km.
5.57
1.39
0.51 0.48
0.00
1.00
2.00
3.00
4.00
5.00
6.00
U.S. Pakistan China India
Transmission Network
Km per 100 Sq Km
Year : 2014. Data excludes Distribution Network
15.0 14.3
18.75
16.00
21.520.3
18.75
16.00
Napt, 17.05
HSD, 19.61
LPG,15.69
FO, 10.82
Napt, 25.45
HSD, 29.54
LPG, 24.53
FO, 16.58
0.0
5.0
10.0
15.0
20.0
25.0
30.0
Brent 13.5% Brent 12.5% Henry Hub $7 Henry Hub $5 Brent 13.5% Brent 12.5% Henry Hub $7 Henry Hub $5
Brent – 13%
24
Affordability(Landed Price at Gujarat, $/MMBTU)
Brent - 100 USD /BBL(August, 2014)
Brent - 60 USD /BBL(April , 2015)
Remedy
25
Removal of Infrastructure bottleneck to take advantage of low price regime
Timely completion of Project.
Regulatory control to ensure logical commitment
Substantial penalties in case of failure, to stop players in becoming bottleneck
Powerpoint Templates
Working together for a better tomorrow…,
Thanks