THE ENERGY CHALLENGE

TOTAL COMMERCIAL ENERGY REQUIREMENTS YEAR TOTAL PRIMARY ENERGY (MMTOE) 7% GDP 2006-07 385 8% GDP 394

2011-12
2016-17 2026 - 27 2031-32

505
653 1060 1333

537
718 1248 1620

- FOUR FOLD GROWTH

DRAFT REPORT - INTEGRATED ENERGY POLICY PLANNING COMMISSION

THE ENERGY CHALLENGE

ELECTRICITY REQUIREMENTS YEAR 2003-04 2006-07 INSTALLED CAPACITY - MW 7% GDP 131424 149806 8% GDP 131424 152610

2011-12
2016-17 2021-22 2026 - 27 2031-32

206757
276143 368592 480694 627088

219992
305623 424744 574748 778095

- FIVE TO SIX FOLD INCREASE

DRAFT REPORT - INTEGRATED ENERGY POLICY PLANNING COMMISSION

THE ENERGY CHALLENGE

REQUIREMENT OF COAL AND GAS POWER SECTOR YEAR COAL (MMT) 7% 2003-04 318 8% 318 GAS (MMTOE) GAS (MMSCMD) 7% 13 8% 13 7% 39 8% 39

2011-12
2016-17 2021-22 2026-27

366
455 678 885

375
493 814 1133

17
36 48 69

18
41 58 89

51
108 145 208

54
124 175 268

2031-32

1096

1478

100

134

301

404

NON POWER GAS DEMAND = 227 MMSCMD TO 274 MMSCMD

GAS DEMAND OVER NEXT 25 YEARS = 528 MMSCMD TO 678 MMSCMD

INDIAN GAS SECTOR MAJOR MILESTONES

35 30 25 20
BCM
SOUTH BASSEIN BOMBAY HIGH ACCELERATED DEVELOPMENT OFFSHORE

LNG IMPORTS MAR -- 04

MYANMAR FIND

KG FINDS

15 10 5 0
72/73 74/75 76/77 78/79 80/81 82/83 84/85 86/87 88/89 90/91 92/93 94/95 96/97 98/99 00/01 02/03 04/05

Years

INDIAN GAS MARKET OVERVIEW

DOMESTIC SUPPLIES IMPORTS (LNG) DEMAND POTENTIAL MAJOR PLAYERS
E&P LNG PETRONET LNG LTD (JV OF PSU,s, GDF, ADB) SHELL HAZIRA LNG LTD (SHELL, TOTALFINA-ELF) RATNAGIRI PROJECT ONGC, OIL, RELIANCE, BRITISH GAS, CAIRN, NIKO, GSPC

74 MMSCMD 18 MMSCMD 150 MMSCMD 92 MMSCMD

GAS TRANSMISSION & MARKETING - GAIL (INDIA) LTD REGIONAL / RETAIL - MGL, IGL, GCC, GSPC, AGC, TNGCL, PLAYERS BGL, GSPL, GGL & OTHERS

GAS END USE PATTERN

CONSUMPTION - 92 MMSCMD

10% 13% 42% 4%

31%
POWER OTHERS FERTILIZER I.C./SHRINKAGE SPONGE IRON

TYPICAL PIPELINE SYSTEMS

MAIN TRANSMISSIO N SYSTEM
Typical Pressure Range (Bar) Diameter Material of construction Others 40 to 70 24 to 48 Steel Supply to regional system or large customer

REGIONAL TRANSMISSIO N SYSTEM

15 to 40 Up to 22 Steel
Supply to medium scale consumers & feed to distribution systems

DISTRIBUTION SYSTEM
10 to 0.025 Down to 2 Steel or HDPE Pipe
Supply to small consumers & residential users

CROSS BORDER GAS PIPELINES

MYANMAR- INDIA GAS PIPELINE

ON-SHORE PIPELINE : MYANMAR NE - INDIA

LENGTH: 1500 KM

DIAMETER: 36
NO CROSS BORDER AND POLITICAL ISSUES WITH BANGLADESH GOVERNMENT.

ACCESS TO POTENTIAL CUSTOMERS IN NORTH-EAST INDIA,

NORTH - BENGAL AND BIHAR

OPPORTUNITY OF CONNECTING TRIPURA AND OTHER NE

GAS FIELDS.
LONGEST AMONG ON-LAND PIPELINE OPTIONS. HILLY TERRAIN.

OPTIONS OF GAS EVACUATION FROM MYANMAR TO INDIA 8 NOS.

A. Offshore Pipelines - Shallow water (200~250 m) - Deep water (1560 m) - Deep water (2210 m) B. Onshore Pipelines - Via Chittagaon - Coxs Bazaar (Bangladesh) - Via Tripura (India) - Dhaka (Bangladesh) - Through North-East Indian territory C. LNG Marine Route D. CNG Marine Route Within EEZ of Bangladesh Outside EEZ of Bangladesh

OPTIONS OF GAS EVACUATION FROM MYANMAR TO INDIA

MYANMAR- INDIA GAS PIPELINE
Jagdishpur OFF-SHORE SHALLOW WATER OFF-SHORE DEEP WATER (WITHIN EEZ) OFF-SHORE DEEP WATER (OUTSIDE EEZ) ONSHORE ROUTE VIA. BANGLADESH ONSHORE VIA. N E INDIA

LNG OPTION
CNG OPTION

Gaya

ALT-II VIA TRIPURA

ALT-I( VIA CHATTGAON/ COXS BAZAR)

PROPOSED JAGDISHPUR- HALDIA PIPELINE

HALDIA

SITTWE LANDFALL POINT MYANMAR PARADIP BLOCK A-1 MYAYNGU KYAN

Iran Pakistan- India Gas Pipeline

INDICATIVE IRAN-PAKISTAN- INDIA PIPELINE ROUTE

ASSALUYAH

BHONG

Indicative Pipeline Route

AC-1

JAISALMER

Assaluyah Pakistan Border 1100 KMs Pakistan Border AC1 750 KMs AC1 India Border 250 KMs

SALIENT FEATURES

Gas Demand for India: 60-90 MMSCMD Gas Demand for Pakistan:30-60MMSCMD Pipeline size: 56 Pipeline Length: 2100 KMS Capital Cost: Approx.Rs. 29000 Crores. O&M Cost: 2% of Capital Cost Transit Fee: to be decided as per the Energy Charter Treaty (ECT)

CROSS BORDER GAS PIPELINES

TURKMENISTAN - AFGHANISTAN - PAKISTAN GAS PIPELINE

PROPOSED ROUTE OF TAP PIPELINE

SALIENT FEATURES
GAS SUPPLY : 90 MMSCMD PIPELINE SIZE: 56 PIPELINE LENGTH: 1700 KMS CAPITAL COST: APPROX. $ 3.3 bn TRANSIT FEE: AS PER INTERNATIONAL NORMS

Exploration Status
Initiated

35%
Poorly Explored

18% 29%
Unexplored

18%

Well Explored

Exploration Status
Only 18% of the total 3.14 million sq. km. has been extensively explored < 25% of total prognosticated resources established Reserves estimated only in 15 of the 26 basins Low Drilling Density

 The exploration and production activities were carried out in various sedimentary blocks in India by NOCs on nomination basis till formulation NELP and ML policies

After formulation of NELP and ML policies the blocks of sedimentary basins were awarded for Exploration and production activities to NOCs as well as Private Oil Companies on competitive bidding.

Phase-I (93 Blocks) Phase-II (21 Blocks) Wells Drilled (17 Blocks) Development Phase (4 Blocks)
Delhi

Status of Exploration
Phase-I
93

Kolkata

Mumbai

21 4

Phase-II

Dev. Phase
Chennai

Total
NELP Pre-NELP

118 Blocks
90 Blocks 28 Blocks

History of Gas Pricing India Gas a nuisance during production of Oilin in early years difficult to get value for it. In 1960s sold for a few rupees per MCM. In1970s demand for gas grew in Assam and Gujarat, prices rose. Gas used for applications including as city gas. ONGC to get revenue from gas priced it on thermal equivalence of alternate fuel. In one factory two different prices for gas based upon the end use. Consumer resistance & disputes were settled only after two decades. In 1987 uniform price for all consumers with special concession only for the North East region.

Existing APM Gas Pricing Kelkar Committee (1991) parity with imported fuel oil,
but price fixed on a yearly incremental basis. Shankar Committee (1997) basic price of NG to basket of imported fuel oils at 55% in first year 65 % in second year and 75% in third year. Gas prices were to reach 100 per cent parity with fuel oil by 2001-02 after which linked to the market, this has not happened. Defined fuel oil basket now extremely high. APM Price eventually revised in 2005 to Rs. 3200/MCM(approx. $2.10 per mmbtu)

Producing field

Present Prices of Non-APM Quantity Price (in $/mmbtu) Gas (in mmscmd) Floor Ceiling
5 6 2.96 1 4.08 3.86 1.75 2.30 3.06 3.68 3.76 3.45
3.00

Panna, Mukta & Tapti

Ravva PSC

Ravva Satellite Lakshmi Contract I Contract II GSPCL Regassified LNG at Dahej (Before sales tax)

3.30 4.46

CNG Pricing
Maharashtra
Mumbai Rs 20.90 per kg Mira-Bhayandar Rs 21 per kg Thane Rs 21.30 per kg

National Capital Region

Delhi Rs 18 per kg

Gujarat
Ahmedabad Baroda Bharuch Ankaleshwar Rs 25.53 per Kg Rs 20.92 per Kg

Some Comments
Myanmar had offered well-head gas at $2.52/mmbtu
Excluding processing and transportation costs

India wanted Iran gas landed at $2/mmbtu

All put together, the cost of gas at the Indian border is expected to be above $5 per mmbtu as Iran wants LNG price for pipeline gas also

NTPC now willing to buy gas at a premium

as against the current APM gas price of $ 2.1 per mmbtu which is in short supply

Demand Assessment -Natural Gas

MMSCMD
2007 2010
95 60 25 15

2012
110 60 30 15

Power Sector
Fertilizer Sector Industrial Sector City Gas Distribution Total

75 50 20 10

155

195

215

Demand-Supply Balance

2003-04
75

120 mmscmd

mmscmd

Unmet Demand: 45 mmscmd

Window of opportunity of approx 40 mmscmd

2010-11
60 60 60

180 mmscmd
LNG

215 mmscmd
Unmet Demand: 35 mmscmd

Demand

Supply existing sources

Supply new domestic finds