School of Petroleum Management ( PDPU)

(PGDPMX-2012) Module-VI (Business of LNG-I) Assignment Prepare a blue print of the LNG imports and supporting infrastru ture re!uired in "ndia b# 2020 $ubmitted %#& Pradipsinh Parmar 'oll no&(2012(01() Submitted To Dhiren M Desai! dhiren"desai#ee$s!in )mail&pradip*e+#ahoo, o,in

Ma ro anal#sis for demand> suppl# of Gas in "ndia

Introduction
"ndia is the fourth largest onsumer of energ# in the -orld after .$/0 1hina and 'ussia but it is not endo-ed -ith abundant energ# resour es, "t must0 therefore0 meet its de2elopment needs b# using all a2ailable domesti resour es of oal0 uranium0 oil0 gas0 h#dro and other rene-able resour es0 and supplementing domesti produ tion b# imports, 3he "ndian e onom# has been pro*e ted to a hie2e an a2erage real GDP gro-th of 4,56 during 2007-20(8, )nerg# a2ailabilit# is 9e# to e onomi gro-th and therefore0 going for-ard high e onomi gro-th -ould lead to in rease in the energ# onsumption of the ountr#, 3he primar# energ# mi: of "ndia is also set to alter on a ount of the substitution of oil b# natural gas, 3he share of natural gas in the energ# mi: is e:pe ted to in rease to 206 in 2028 and be#ond as ompared to 116 in 2010, 3he e:pe ted hange in the primar# energ# bas9et for "ndia in 2010 and 2028 has been presented in 3able 1

3he li!uefa tion of natural gas dates ba 9 to the 1;th entur# -hen German engineer <arl =on Linde built the first ompressor>refrigeration ma hine in 17?(, 3he first ommer ial natural gas li!uefa tion plant began operations 1

in 1;51 in 1le2eland @hio, "n 1;8;0 the first LNG tan9er0 the Methane Pioneer0 arried a LNG argo a ross the /tlanti @ ean from the .nited $tates to the .nited <ingdom, Aith the in reasing demand and profitabilit# of LNG0 there has been a mar9ed in rease in the number of LNG tan9ers and fa ilities, 3here has also been a fast pa ed on2ersion to ne-er te hnolog# dri2en b# e onomies of s ale, "n Bul# 20070 $amsung Cea2# "ndustries deli2ered the LNG tan9er0 MoDah0 -ith a apa it# of 2440000 ubi meters0 to )XX@N, 3hat apa it# is basi all# double that of tan9ers built 8 #ears ago, 3his report -ill ontinue -ith a des ription of the LNG suppl# hain and a loo9 at urrent trends and ris9s asso iated -ith LNG,

Picture %il and &as $roduction $latform in sea, "ndiaEs primar# energ# suppl# is urrentl# dominated b# oal (8(6)0oil ((06)0C#dro 86 and least stand for nu lear onl# 160 -hile the share of natural gas is onl# 116, 3he demand for natural gas is 41 b m (bet-een 200; and 2010) and the pro2ed and re o2erable reser2es are estimated at 15(? b m as of /pril 2010, Natural gas use in "ndia reall# started to gro- in the late 1;?0s after the first ma*or gas dis o2eries in the -estern offshore region and the de2elopment of the first transmission pipeline in the northern region, %efore 200;0 gas demand potential -as )stimated to be 20 or (0 b m higher than a tual use as onsumption had been onstrained b# the la 9 of suppl# for o2er a de ade, 3o address the suppl# shortfall0 the "ndian go2ernment passed some reforms at the end of the 1;;0s to en ourage Domesti produ tion and the onstru tion of li!uefied natural gas (LNG) terminals

1urrentl# the distribution net-or9 is on entrated in Aestern "ndia, 3he t-o LNG terminals (Dahe* and CaDira) are also on the -est oast of "ndia, Due to la 9 of natural gas infrastru ture0 a pilot s ale LNG distribution thru LNG tan9ers is also %eing studied b# Petronet LNG
$our es& "nternational )nerg# /gent (")/)0 MoPNG0 MoP0 G/"L0 PNG'%0 Petronet LNG0 "nter2ie-s

Primar' demand and Su$$l' anal'sis of (atural &AS in India,

"ndiaEs limited a ess to energ# supplies ma# limit its e onomi gro-th potential, 3he primar# and priorit# onsumers of natural gas are the fertiliDer and the Po-er industries, 3he se ondar# onsumers are it# gas distribution net-or9s0 ompressed natural gas (1NG) and industrial users, "n the ele tri it# se tor0 "ndia is fa ing a serious risisF the present energ# and pea9ing shortage in the ountr# is pegged at 10,(6 (Mar h 2011),3he planning ommission of "ndia has set up an e:pert group to re ommend an integrated energ# poli #, Man# of the poli ies 'e ommended for oal are alread# implemented0 but the progress on Po-er se tor has #et to sho- results -hile the oil and gas se tor ontinues -ith an unsustainable pri ing poli #, Cistori all# natural gas -as heaper than alternate fuel li9e petrol0diesel0naptha oil0 and other L$C@GH@,Aith the in reasing demand of gas and te hnologi al ad2an ement had made it 2iable to use large s ale of gas in po-er0fertlisers0 and domesti use,

"t has be ome easier for the po-er0 fertiliDer and 1GD se tors0 as -ell as industrial and ommer ial establishments0 to s-it h o2er to natural gas for their energ# re!uirements, "n the near future po-er and fertiliDer se tors are e:pe ted to remain the an hor segments for natural gas demand in "ndia, Going for-ard though0 -ith the additional suppl# of gas signifi ant demand for natural gas is also e:pe ted to ome from the industrial (usage both in pro ess and po-er generation - ogeneration) and 1GD segments, 3he total onsumption of natural gas -as 12? mms md (Banuar# 201() -ith po-er and fertiliDer se tors onsuming (4 and (; mms md of gas respe ti2el#, 3he se tor -ise onsumption has been presented in 3able 2,

Indian Po)er sector Demand and su$$l' anal'sis! /s of Mar h (10 2012 "ndia had an installed po-er apa it# of almost 20000000 MA! Hydr o Coal STATE PRIVAT E CENTR AL TOTAL 27,38 0 2,525 9,085 38,990 49,457 23,450 39,115 112,02 2 Thermal Gas Dies Total el 4,965 603 55,025 6,713 6,702 18, 8 1 597 0 1,!" " 30,761 45,817 1 1,#" Nucle ar R.E.S. Total

(MNR E) 0 3,514 0 4,780 $,%8" 20,990 0 24,503

85,919 54,276 59,683 199,8% %

3he gas based po-er generation 17(71MA is ;,16 of "ndiaEs total generation apa it#. 3he follo-ing table gi2es po-er se tor gas demand as per national planning ommission report in 12th and 1(th plan #ear.

$uppl# anal#sis of Natural G/$ in "ndia,

1urrent suppl# situation of natural gas in "ndia, 3he pro*e tion of suppl# of gas in "ndia from domesti and LNG import up to #ear 202;(0

%oth domesti gas produ tion and gas imports ha2e to in rease in order to meet the demand from the po-er and fertiliDer industries, 3he natural gas in "ndia is sold in different forms& i) ii) iii) i2) 'egasified Li!uefied Natural Gas ('LNG) through pipelinesF 1NG ompressed to 200-280 barg used as fuel for transportationF Piped Natural Gas (PNG)>1it# Gas to domesti users and Natural Gas transported dire tl# from onshore>offshore field Produ tion0

"ndia has 15(? b m of pro2en natural gas reser2es as of 1st/pril 2010 of -hi h 72; b m are onshore and the rest offshore reser2es, Domesti produ tion of natural gas -as 5?,8 b m in 2010 (Higure of -hi h 726 omes from offshore and rest from onshore fields (586 from @NG1 and the rest from B=1>Pri2ate se tor), Produ tion had been flat at (0 b m sin e 20020 till the start of eastern offshore <G field in /pril 200; -hi h added appro:imatel# 18 b m (200;10), "ndigenous gas produ tion in "ndia an be lassified on regulator# I ontra tual basis as follo-s0 nominated fields a-arded to National @il 1ompanies (N@1)0 $mall siDe I Medium siDe fields a-arded to pri2ate parties0 pre-N)LP dis o2ered fields0 N)LP fields and 1%M blo 9s, Hor pro*e ting the natural gas suppl# from the domesti sour es for the period 2012-1( to 202;-(00 the gas suppl# pro*e tions pro2ided in the Plan Do ument ha2e been onsidered as referen e, Co-e2er0 these pro*e tions ha2e been further refined on the basis of information obtained from DGC and @NG1 as pro2ided in 3able 14 and table 1? and table 17,

Gas "mported through LNG and Pipe Line in "ndia,

"ndiaEs urrent LNG import apa it# is 12,8 MM3P/ (18,7 b m) -ith LNG terminals at Dahe* (10 MM3P/) and CaDira (2,8 MM3P/), 3-o more terminals are under onstru tion at Dabhol(8,8 MMP3/) and <o hi (2,8 MM3P/ and e:pandable to 8,0 MM3P/) and -ill start in #ear 201(, 3hese LNG supplies are sour ed from Jatar0 /ustralia0 and 3rinidad and 3obago, 3he bul9 demand for "ndia natural gas is from the po-er se tor (58,26) and the fertiliDer industr# (2?,;6), 3hese t-o industries a ount for ?(6 of total natural gas onsumption,

India's gas demand to more than doub e to 606 mms!md b" 2022
"ndiaKs natural gas demand is li9el# to more than double to 5?( million standard ubi meters per da# b# 2014-1? -ith most of in remental demand oming from po-er plants, /s per the pro*e tions made b# @il Ministr# for the 12th Hi2e Lear Plan (2012-1( to 2014-1?)0 urrent gas demand of 17; mms md is li9el# to rise to 5?( mms md, "The ove !"" #e$!n# %ou"# & o% f o$ 293 $$s'$# (in 2012-13) )o 473 $$s'$# (in 2016-17) ove )he 12)h *"!n *e io# !n# f o$ 494 $$s'$# (in 2017-18) )o 606 $$s'$# (in 2021-22) ove )he 13)h *"!n *e io#," !''o #in& )o )he * o+e')ions. M3his represents a ompounded annual gro-th rate of ?,8 per ent o2er the t-o plan (10 #ear) periods0M it said, @f the 5?( mms md demand at the end of 12th Hi2e Lear Plan period0 20? mms md -ould be from po-er and another 11( mms md from fertiliDer plants, Po-er plant -ould need (0? mms md b# 2021-22 -hile fertiliDer units ma# not see an# in remental demand during 201? to 2022, Domesti natural gas produ tion urrentl# is about 120 mms md and another 54,( mms md is imported in form of li!uefied natural gas (LNG), 3he total a2ailabilit# of 145 mms md is short of urrent demand of 17; mms md, $tate-o-ned @il and Natural Gas 1orp (@NG1) produ es under 81 mms md of gas -hile output from the prolofi <G-D4 fields of 'elian e "ndustries is about 58 mms md, @il "ndia produ es 4,4 mms md and another 11,; mms md omes from -estern offshore Panna>Mu9ta and 3apti fields, @f the urrent supplies0 41,5 mms md goes to po-er se tor -hile fertiliDer plants onsume (?,? mms md, 3he remaining is used b# it# gas pro*e ts0 refineries0 petro hemi al plants and sponge iron units, Ahile <G-D4 gas is pri ed at .$D 5,20 per million %ritish thermal unit0 PM3 gas is pri ed at .$D 8,8?-8,?( per mm%tu, @NG1 sells gas to priorit# se tor at .$D 5,2 per mm%tu and to non-priorit# se tor at .$D 5,2-8,28 per mm%tu, LNG is pri ed at .$D 7,5-14 per mm%tu, / ording to the pro*e tions0 domesti gas out put -ould rise to 210 mms md b# 20141? -ith @NG1Ks gas produ tion rising to ;2 mmsm d, Pri2ate firms in luding 'elian e -ould produ e 10? mms md,

10

LNG imports are pro*e ted to rise to 287 mms md, 3he in remental imports -ould ome from Petronet LNG LtdKs urrentl# operational Dahe* terminal in Gu*arat being e:panded to 18 million tons from urrent 10 million tons and its 8 million tons a #ear fa ilities ea h oming up at <o hi in <erala and east oast, Ne- terminals are en2isaged at )nnore in 3amil Nadu and Mundra in Gu*arat -hile 'o#al Dut h $hellKs CaDira termin!" in Gu+! !) is * o+e')e# )o ,e e-*!n#e# )o 10 $i""ion )ons f o$ 'u en) 3.6 $i""ion )ons."ndia is be oming a ma*or oil importer and -ill soon be ome the third largest importer of oil ne:t to Bapam0$outh <orea.$/ and 1hina, 3e hnolog# inno2ations to impro2e effi ien # of fuel use b# automobiles0 de2eloping Mass 'apid 3ransport $#stems for mo2ing passenger traffi and also shifting goods transport from road to rail -ould result in large sa2ings of oil and redu e import dependen e, 3he 12th Plan should aim at de2eloping an effi ient publi and freight transport s#stem, .!+o inves)$en)s )o &e) !''ess )o fue" sou 'es "o'!)e# in o)he ene &/ esou 'e- i'h 'oun) ies %i"" ,e )!0en u* !s !n in)e& !" $e!su e of ove !"" &ove n$en) e'ono$i' *o"i'/ )o s) en&)hen ene &/ se'u i)/. This %i"" 'ove 'o!", oi", &!s ese ves !n# u !niu$. Bo)h *u,"i' !n# * iv!)e inves)o s %i"" ,e en'ou !&e# )o !'1ui e su'h !sse)s !n# #eve"o* su**"/ sou 'es in #iffe en) *! )s of )he %o "# )o !u&$en) #o$es)i' !v!i"!,i"i)/. In)e n!)ion!" &!s esou 'es f o$ "i1uefie# n!)u !" &!s (LNG) !n# )h ou&h *i*e"ines %ou"# su**"e$en) )he ene &/ e1ui e$en)s !n# ,e ne&o)i!)e#. The 'u en) LNG inf !s) u')u e %ou"# ,e fu )he #eve"o*e# )o !''ess )his. 2o$es)i' &!s *i*e"ine ne)%o 0 %i"" ,e e-*!n#e# !n# ! n!)ion!" &!s & i# #eve"o*e#. The * esen) *o"i'/ of * o$o)in& inves)$en)s in * iv!)e se')o in efine ies !n# *i*e"ines fo ) !ns*o )in& ,o)h oi" !n# &!s %ou"# 'on)inue. The ove !"" oi" *i*e"ine ne)%o 0 fo !v!i"!,i"i)/ of hi&h 1u!"i)/ ) !ns*o ) fue"s %i"" ,e !u&$en)e# !s ne% efine / '!*!'i)ies 'o$e u* !n# )his %i"" he"* * ovi#e ! &oo# e-*o ) *o)en)i!" !n# L3G

fo 'oo0in& !n# !v!i"!,i"i)/ of 1u!"i)/ fue"s fo ) !ns*o ).

sou 'e4 h))*455ne%s.onein#i!.in5h/#e !,!#5*!ne"-see0s-,"ue* in)-)o-i$* ove-n!)u !"-&!s-ou)*u)-su**"/-1340623.h)$"

Ma ro anal#sis for Aorld LNG $uppl# Mar9et,

11

Aorld natural gas onsumption gre- b# 2,260 belo- the histori al a2erage of 2,?6, 1onsumption gro-th -as abo2e a2erage in $outh I 1entral /meri a0 /fri a0 and North /meri a0 -here the .$ (N5,16) re orded the largest in rement in the -orld, "n /sia0 1hina (N;,;6) and Bapan (N10,(6) -ere responsible for the ne:t-largest gro-th 12

in rements, 3hese in reases -ere partl# offset b# de lines in the ). (-2,(6) and the Hormer $o2iet .nion (H$.) (-2,46), Globall#0 natural gas a ounted for 2(,;6 of primar# energ# onsumption, @)1D onsumption gre- more rapidl# than non-@)1D onsumption for the fi rst time sin e 2000,Global natural gas produ tion gre- b# 1,;6, 3he .$ (N5,?6) on e again re orded the largest 2olumetri in rease and remained the -orldEs largest produ er, Nor-a# (N12,46)0 Jatar (N?,76)0 and $audi /rabia (N11,16) also sa- signifi ant produ tion in reases0 -hile 'ussia (-2,?6) had the -orldEs largest de line in 2olumetri terms LNG trade fell in 2012 after (0 #ears of onse uti2e gro-th, Global flo-s fell b# 1,46 from 251,8 M3 in 2011 to 2(?,? M3 in 2012, 3he ontra tion -as largel# dri2en b# suppl#-side issues in $outheast /sia and domesti and politi al hallenges in the Middle )ast and North /fri a (M)N/) region, Bapan and <orea are the

13

-orldEs dominant LNG importers and a ounted for 826 of the mar9et0 up 56 from 2011,3he global mar9et for shipped natural gas is entering 9e# #ears of hange in 2015 -ith se2eral ne- bu#ers emerging -hile big ne- supplies -ill onl# slo-l# be ome a2ailable from 20180 resulting in a tight mar9et for #ears to ome, Demand for li!uefied natural gas (LNG) has been rising for #ears0 dri2en mostl# b# booming /sian demand and a loss of nu lear po-er in Bapan and more re entl# $outh <orea, "mport needs are set to rise further in 2015 as 1hina and Latin /meri a are be oming in reasingl# a ti2e bu#ers, OLoo9ing to-ards 20150,,, rising 1hinese import apa it# and ontinued strong demand out of Latin /meri a suggest global LNG mar9ets are heading to-ards another tight #ear0P %an9 of /meri a Merrill L#n h (%o/ML) said in a resear h note this month, Ahile demand for LNG is e:pe ted to rise0 anal#sts sa# that big suppl# additions are not e:pe ted before 2018, O@n the suppl# side0 there is plent# to be on erned about, Pro*e ts in /ngola0 /lgeria and Nigeria ha2e been underperforming, Ma*or /ustralian pro*e ts should start to hit the mar9et in 20150 but -e ontinue to see a dearth of ne- li!uefa tion pro*e ts oming online until 20180P %o/ML said, /s a result of the tight mar9et in 20150 the report said that /sian spot pri es ould rise abo2e last -interEs highs of almost Q20 per million %ritish thermal units (mm%tu) this -inter0 up from a urrent pri e of Q17,(0 per mm%tu, 14

Ahile some ne- suppl# sour es are e:pe ted to ease the mar9et some-hat b# 20180 dri2en largel# b# ne- e:porters from the .$ and /ustralia0 anal#sts sa# that a rise in LNG demand of around ?6 a #ear until 2020 -ill still result in a tight mar9et for most of the de ade, OGlobal gas demand is surging0 -hi h is dri2en b# a preferen e to-ards lo-er arbon fuels0 a shift a-a# from nu lear and emerging mar9et gro-th, /s a result0 -e e:pe t international gas mar9ets to remain RtightE through to 20200P %ernstein 'esear h said this month in a global gas mar9et stud#, %e#ond an o2erall tight mar9et outloo90 large regional suppl# and demand differen es are e:pe ted to remain in pla e, North /meri a0 -here the shale gas boom has pulled do-n pri es0 -ill benefit from lodomesti pri es and an opportunit# to e:port its e: ess gas to /sia0 -here pri es are e:pe ted to rise further on the ba 9 of booming demand and a la 9 of signifi ant gas produ tion of its o-n,

OGas mar9ets -ill remain fragmented0 di2ided bet-een North /meri a0 -here
gas is abundant and pri es are lo- and international mar9ets -here gas -ill be suppl# onstrained and pri es ontinue to rise0P %ernstein said, 3he resear hers added that this imbalan e -ould result in a sharp rise in global LNG trading a ti2it#0 as produ ers and shippers tr# to ta9e ad2antage of regional pri e differen es,%e#ond a tight mar9et0 LNG trading is set to be ome more di2erse0 -ith se2eral ne- bu#ers and sellers entering the stage, @n the demand side0 1hina is fast emerging as a ma*or bu#er0 -ith si: LNG import terminals li9el# to be ome operational bet-een No2ember 201( and the end of ne:t #ear,, 1hina0 -hi h is alread# the -orldEs top energ# user 0but is so far onl# a small LNG pla#er0 is 9een to urb use of dirtier oal and aims to triple the use of natural gas to top (00bn ubi metres (b m) b# 20200 -ith nearl# a third of that ha2ing to be imported to 1hina 2ia LNG, 3he 1hinese gas demandGsuppl# pro*e tion from 2010 to 2020,00

15

"n the /meri as0 import demand is also rising espe iall# in Me:i o and /rgentina -here domesti produ tion is dropping -hile demand is on the up,'ea ting to rising demand0 ne- sellers are slo-l# emerging,

'ussia0 the -orldEs biggest supplier of pipeline gas0 has so far been slo- to enter
/siaEs booming LNG mar9et0 but the go2ernment passed legislation this month to-ards allo-ing ri2als of state- ontrolled GaDprom to e:port LNG in a mo2e to enter gro-ing /sian mar9ets, "n North /meri a0 the .$ -ill begin to e:port LNG from 2018 and most anal#sts sa# that 2olumes -ill rea h o2er 80b m b# 20200 and 1anada also has plans to begin e:ports this de ade, %ut the biggest ne- e:porter is li9el# to be /ustralia0 -hi h ould hallenge the -orldEs top LNG shipper Jatar b# rea hing annual e:port 2olume of almost 100b m b# 2020, Jatar e:ported 108,5b m of LNG in 2012, Co-e2er0 most of this LNG -ill be ome a2ailable after 2018 and at minimum osts of almost Q18 per mm%tu0 so it -ill a t more as a pri e stabiliDer rather than help bring do-n pri es, @ther ma*or LNG e:port sour es0 su h as )ast /fri a or the )ast Mediterranean0 are not e:pe ted to ome to o$e )o $! 0e) ,efo e 2018 !) )he e! "ies).

16

Point &(

/nal#sis of e:isting and planned infrastru ture for Gas in india,

17

3he "ndian e:isting LNG 2alue hina ,

18

Li!uefied Natural Gas (LNG) is natural gas that has been refrigerated to the point that it ondenses to a li!uid, 3his o urs at a temperature of appro:imatel# -141 1 (-284H), 3his li!uefa tion redu es the 2olume of the gas b# a fa tor of appro:imatel# 400, 3his in rease in e onom# of s ale ma9es the storage and transportation of natural gas e:tremel# e onomi al0 and fa ilitates global a ess to a relati2el# abundant sour e of energ#, 3he li!uefa tion of natural gas dates ba 9 to the 1;th entur# -hen German engineer <arl =on Linde built the first ompressor>refrigeration ma hine in 17?(, 3he first ommer ial natural gas li!uefa tion plant began operations in 1;51 in 1le2eland @hio, "n 1;8;0 the first LNG tan9er0 the Methane Pioneer0 arried a LNG argo a ross the /tlanti @ ean from the .nited $tates to the .nited <ingdom, Aith the in reasing demand and profitabilit# of LNG0 there has been a mar9ed in rease in the number of LNG tan9ers and fa ilities, 3here has also been a fast pa ed on2ersion to ne-er te hnolog# dri2en b# e onomies of s ale, "n Bul# 20070 $amsung Cea2# "ndustries deli2ered the LNG tan9er0 MoDah0 -ith a apa it# of 2440000 ubi meters0 to )XX@N, 3hat apa it# is basi all# double that of tan9ers built 8 #ears ago, 3his report -ill ontinue -ith a des ription of the LNG suppl# hain and a loo9 at urrent trends and ris9s asso iated -ith LNG,

3#pi al LNG $uppl# 1hain

"n "ndia LNG 9e# pla#er are Petronet LNG and shell CaDira both lo ated in state of Gu*arat, 3he (PLL) has a share of 20 per ent in the gas mar9et urrentl#, 3he ompan# has an import and re-gasifi ation terminal at Dahe*0 -hi h has a apa it# of 10 million metri tonnes a #ear, 3he ompan# is in the pro ess of in reasing the apa it# of its

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Dahe* terminal b# additional 8 MM3P/, 3he additional *ett# under onstru tion is to be ommissioned b# $eptember 201(, 3he ompan# laims to raise its LNG regasifi ation apa it# b# one-and-a-half times to 28 million tonnes b# 2018, 3he ompan# in the pro ess of setting up a Greenfield LNG terminal of 8-million-metri tonne terminal in <o hi0 -hi h is e:pe ted to be ommissioned b# the end of 201(, Aith the ommissioning of the terminal0 the gas mar9et in the south is e:pe ted to de2elop and more and more demand is li9el# to be seen, PLL and GaDprom Mar9eting and 3rading $ingapore (GMI3$)0 the $ingapore affiliate of GaDprom Global LNG (GGLNG) and 100 per ent subsidiar# of GaDprom Mar9eting I 3rading0 ha2e entered into a Memorandum of .nderstanding (Mo.) for the suppl# of LNG on a long-term basis, /s per the agreement0 PLL -ill re ei2e 2,8 million tonnes per annum of LNG from GMI3$Ks international suppl# portfolio for a period of 28 #ears, 3he ompan# has ontra ted to re ei2e 1,55 MM3P/ LNG from )::on Mobiles 28 per ent sta9e in /ustraliaEs Gorgon pro*e t at pri es higher than the e:isting LNG ontra ts, 3he suppl# is e:pe ted to start in 2015-18, 3he terminal -ill be the biggest in the ountr# and the first one in $outh "ndia0 and -ill ha2e the apa it# of (7 MM$1MD a da# -hen ompleted, PLL has sour ed about ?,8 million tonne LNG through long-term 1ontra t -ith 'asGas0 Jatar and a mid-term ontra t -hi h -ill ontribute 1,8 million tonne0 totaling around ; million tonne0 -ith ba 9 to ba 9 sales arrangement -ith G/"L0 "@1L I %harat Petroleum 1orporation Limited (%P1L), 3he ompan# is sour ing additional LNG through spot or short-term ontra ts and is selling it to offta9ers or bul9 bu#ers, PLL0 in partnership -ith G/"L0 is loo9ing at the possibilit# of setting up the ountr#Ss first LNG terminal on the east oast0 -hi h is e:pe ted to ha2e a apa it# of fi2e million tonnes a #ear, Depending on the feasibilit# stud# the possible lo ation of the terminal -ould be an#-here bet-een <a9inada in /ndhra Pradesh and Caldia in %engal, 3he terminal ma# be a floating one or ma# be on land, 3he floating unit0 -hi h is present in <u-ait0 Dubai and %rasil0 is faster to deplo# and ma# ost 20500 rore0 about 28 per ent less than a terminal an hored to land, G/"L has signed a *oint 2enture agreement -ith Cindustan Petroleum and Greater 1al utta Gas $uppl# 1orporation for setting up a Li!uefied Natural Gas (LNG) Hloating $torage and 'egasifi ation .nit (H$'.) at Dharma in @rissa0 and this ould entail an in2estment of about (0000 rore, Gail -ill also set up "ndiaSs first 5 million tonne apa it# floating LNG terminal off the /ndhra oast -ith an in2estment of about 20000 rore, 3he pro*e t -ill be implemented b# /ndhra Pradesh Gas Distribution 1orporation0 a ompan# *ointl# promoted b# Gail Gas and /ndhra Pradesh Gas "nfrastru ture0 -hi h has signed an agreement -ith GDH $ueD LNG .< for *ointl# setting up a H$'., 'atnagiri Gas and Po-er Pri2ate Limited ('GPPL)0 "ndiaSs third LNG import and regasifi ation terminal at Dabhol in Maharashtra0 is -or9ing to-ards raising its apa it#

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to 8 mtpa, 3he terminal is e:pe ted to operate at full apa it# during 201(-15, .$D 451 -as in2ested in the onstru tion of the terminal, G/"L is also -or9ing on doubling the apa it# of Dabhol po-er pro*e tSs gas import fa ilit# to 10 million tonnes a #ear, $hipping 1orporation of "ndia ($1")0 -hi h too9 o2er the management of Dabhol LNG terminal re entl#0 sees great gro-th potential in LNG se tor and has been a-arded a three #ear ontra t for pro2iding port and marine ser2i es to the dedi ated Dabhol regasifi ation terminal0 o-ned b# 'GPPL, 1urrentl#0 'o#al Dut h $hell PL1 and Hran eKs 3otal $/0 the t-o multinational oil and gas ompanies and the operators of the CaDira terminal in Gu*arat0 are in the pro ess of in reasing the apa it# of LNG terminal at CaDira to the tune of 8 million tonnes (mt) b# 201( from the urrent apa it# of (,4 mt, 3he# ha2e estimated an in2estment of around T 580 rore for their CaDira e:pansion pro*e t, Due to shortfall in gas produ tion from its <G-D4 field0 'elian e "ndustries Ltd ('"L) is set to enter into the mar9eting of imported natural gas, "ndia Gas $olutions0 the e!ual *oint 2enture bet-een '"L and %ritish Petroleum (%P) set up to sour e and mar9et natural gas in "ndia0 -ill shortl# bring in LNG through the terminals of $hell "ndia and Petronet LNG, '"L is in tal9s -ith 2arious LNG terminal operators to boo9 e: lusi2e apa it# at the e:isting LNG terminals,

(atural &as Pi$e *ine Infrastructure in India!

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"ndia has a relati2el# under-de2eloped gas pipeline infrastru ture -hen ompared to some de2eloped ountries, Co-e2er0 it is gro-ing rapidl# in tune -ith in reasing demand and gro-ing natural gas supplies, "ndia0 urrentl#0 has a net-or9 of U1(0000 9m of natural gas transmission pipelines -ith a design apa it# of around ((? mms md, 3his net-or9 is e:pe ted to e:pand to around 270000 <ms of pipelines -ith a total design apa it# of around ?21 MM$1MD in ne:t 8-4 #ears ta9ing the ountr# lose to the formation of a National Gas Grid onne ting all ma*or demand and suppl# enters in "ndia, 3his -ill ensure -ider and uniform a2ailabilit# of gas a ross all regions for e onomi and so ial progress, "n "ndia G/"L "ndia (OG/"LP) o-ns the largest net-or9 of the natural gas transmission infrastru ture present in the ountr#, 3he ompan# urrentl# o-ns and operates ;00009m (appro:,) of high-pressure natural gas pipelines -ith a transmission apa it# of more than 140mms md, /t around (0?80 9m in length0 G/"LEs CaDira-=i*aipur-Bagdishpur (C=B) pipeline is the longest natural gas pipeline net-or9 in the ountr# operating at 1006 apa it#, Aith no free apa it#0 this net-or9 has been unable to meet the in rease in domesti natural gas supplies stemming from the ommen ement of produ tion at the <G D4 field and the in rease in "ndiaEs o2erall 'LNG apa it#, 3o o2er ome this problem0 G/"L has done e:pansion and up gradation of its net-or9, 3he rest of the ountr#Es natural gas trun9 pipelines net-or9 is o-ned b# Gu*arat $tate Petronet Limited (G$PL) and 'elian e Gas 3ransportation "nfrastru ture Limited ('G3"L) -ith a small net-or9 o-ned b# Gu*arat Gas 1ompan# Limited (GG1L) and /ssam Gas 1ompan# Limited (/G1L), /lthough the gas pipeline o2erage has in reased0 it is still inade!uate to hanneliDe the gas suppl# to demand enters in the ountr#, 3he present state of natural gas transmission infrastru ture in the ountr# has been summariDed in the 3able 28

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/ summar# of pipeline to e:pe ted at the end of #ear 20(0,0

+hallenges LNG poses t-o ma*or hallenges, Hor long-term supplies0 the pri e of LNG is generall# lin9ed to the pri e of rude oil0 and the pri es of 'LNG are mu h higher than the pri es of domesti gas0 in luding from the N)LP fields, 3his forms the first ma*or hallenge, 3he se ond hallenge is the 2olatilit# of the pri es of su h supplies being lin9ed to rude, Cigh pri es oupled -ith high 2olatilit# ma9e it diffi ult for the user industries to plan in2estments based on LNG, /nother hallenge is the pipeline net-or9 in "ndia, Hor the ountr# to be able to onne t to ne- mar9ets0 its

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pipeline net-or9 needs to gro- at a mu h faster rate, "n the ountr#0 in the long-term0 the suppl# of LNG is li9el# to in rease0 and -ould be more e:pensi2e than the urrent pri e paid for Jatari LNG, "f the ountr# intends to attra t additional LNG in the long-term0 it needs to ompete in the global gas mar9ets at pri es potentiall# higher than the urrent onesF or else the supplies -ill be ta9en o2er b# 1hina and other su h /sian mar9ets, 1oastal shipping is underde2eloped in "ndia, "n 200? it a ounted for onl# ?6 of domesti argo mo2ement ompared to 186 in the .$0 (06 in 1hina and 5(6 in ). 1ountries, (Higure 11), "n "ndia0 426 of the freights arried b# road and about (16 b# rail, 3he ommodities arried b# oastal shipping ha2e mainl# been bul9 and brea9 bul9 ommodities, 3he argos urrentl# transported through oastal shipping onstitute rude oil0 iron ore0 ement and others,

3here are 1( ma*or ports and a number of minor and intermediate ports pro2iding tremendous potential for oastal shipping Lo- penetration in short sea shipping ould be attributed to se2eral fa tors& la 9 of omprehensi2e port infrastru ture and e!uipment0 high fuel bun9er pri es0 high ontainer argo handling osts (2,4 times higher than 1hina)0 and la 9 of promotion initiati2es from the "ndian go2ernment Higure 11, $hare of transportation mode in 2007, 1urrentl#0 Petronet has three long term time harters (until 2027) for LNG arriers importing LNG fromJatar to Dahe*, 3he three ships are Disha (deli2ered 2005)0 'aahi (deli2ered 2005) and /seem (deli2ered 200;), Petronet has stated that it has been approa hed b# four ompanies to date to parti ipate in B= on 2arious te hnologies and that it is 2er# 9een in a !uiring suitable partners $hort sea shipping in "ndia -ill gro- signifi antl#, 1urrentl#0 the go2ernment is in2esting hea2il# in de2eloping port and shipping infrastru ture, / total in2estment of Q22,( billion in2ol2ing (7? pro*e ts is e:pe ted to be made in the 1( ma*or ports b# 2012, Non-ma*or ports on the other hand are

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e:pe ted to -itness in2estment -orth Q?,? billion in the urrent )le2enth Hi2e Lear Plan b# in reasingl# in2ol2ing pri2ate operators under the Publi Pri2ate Partnership model, 3he "ndian e onom# an in rease its ompetiti2eness and lo-er osts and emissions b# de2eloping short sea shipping, 3here are ertain barriers to de2eloping sea transport in "ndia& ompetition from rail and road transport is high0 la 9 of / ti2e go2ernment poli #0 non a2ailabilit# of on essional shipping finan e and others (see /ppendi:),

Co-e2er0 de2eloping de entraliDed small s ale LNG suppl# hains ma# ir um2ent these issues and pro2ide fle:ible solutions to natural gas suppl# ases, LNG is mo2ed b# LNG arriers to "ndian import terminals or Hloating $torage 'egasifi ation .nits (H$'.), $tationar# or mobile H$'.s ould onstitute a fo al distribution point for LNG in the region, $mall-s ale LNG 2essels -ould ha2e the fun tion of transporting LNG to smaller satellite terminals from the main terminals and H$'.s, Hrom a terminal0 the LNG -ill be mo2ed -ith standard semi-trailers to a lo al storage area at the ustomerEs site -here it is finall# 2aporiDed and piped to the ustomerEs point-of-use (e,g, fertiliDer produ tion), 3hese small LNG arriers ma# also benefit from %un9ering themsel2es -ith LNG, $our e& PNG'%0petronet lng0planning omission report0ne-spaper0GG"NL0"G. report0MPN@G

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