Challenges of Developing Natural Gas Infrastructure in India

1. Challenges of Developing Natural Gas Infrastructure in India

2. Presentation Flow • Demand- Supply Scenario • Supply Outlook • Demand Outlook • Emerging Scenario • Supply Augmentation • LNG • Transnational Pipelines • Additional Sources • End-Use Outlook • Gas Sector Policy Developments • Gas Sector Infrastructure – Present & Future • Goals to achieve the vision • Issues to be addressed • Policy, Regulatory & Fiscal Provisions Required

3. INDIAN GAS SECTOR: SUPPLY OUTLOOK CURRENT SUPPLIES (2005-06) CURRENT SUPPLY SOURCES BCM (TCF) • HAZIRA (3.2BCM) YET TO STABILISE NOT • INCLUDED UNDER CURRENT SUPPLIES • Domestic Reserves : 1,072 BCM (37.8 TCF) • (Balance Recoverable Reserve as on April 1, 2005) • R/P : 33.5 yrs • Existing Producing Fields Declining Domestic Sources LNG Import CURRENT SUPPLIES – 33.5 BCM (1.2 TCF)

4. 84 2025 INDIAN GAS SECTOR: DEMAND OUTLOOK CURRENT CONSUMPTION (2005-06) DEMAND PROJECTIONS (5 TCF) (4 TCF) CONSUMPTION – 33 BCM (1.2 TCF) PETROCHEM/ LPG POWER FERTILISER HYDROCARBON VISION 2025 INDUSTRIES CITYGAS/ CNG STEEL Demand estimated to grow at 4.2% CAGR DEMAND BY 2025 – 143 BCM (5 TCF)

5. SUPPLY-DEMAND OUTLOOK : EMERGING SCENARIO

6. SUPPLY AUGMENTATION : LNG • LNG share in India’s total Gas Consumption to grow from 11% in 2004-05 to 38.4% by 2009-10 • 12.5 MMTPA of LNG already tied up • 10 MMTPA of LNG to be tied up LNG TO BECOME A SIGNIFICANT SUPPLY SOURCE

7. SUPPLY AUGMENTATION : TRANSNATIONAL PIPELINES • India strategically located for gas imports through trans-national pipelines • Projected shortfall of 28 BCM in 2012 to double in 2025 TRANSNATIONAL PIPELINES TO PROVIDE COST EFFECTIVE SUPPLY SECURITY

8. SUPPLY OUTLOOK : ADDITIONAL SOURCES • India has the 4th largest coal reserves in the world (247 Billion Tons) • Ranks 3rd in coal production (355 Million TPA) • Total Recoverable reserves of only about 20% • Exploitation of current unrecoverable reserves is a major challenge • Coal Bed Methane (CBM), Underground Coal Gasification (UCG) and Surface Coal Gasification hold significant potential for gas

9. SUPPLY OUTLOOK : ADDITIONAL SOURCES

10. INDIAN GAS SECTOR: END USE OUTLOOK • Gas Based Power • Gas Based Fertilizer • LPG & Petrochemicals • CNG, PNG • City Gas- Industrial, Domestic, Commercial

11. SECTORAL DRIVERS FOR CURRENT GAS DEMAND IN INDIA 10894 MW 12 MMTPA 12% 58% Non gas based units POWER FERTILISER 1 MMTPA 2.5 MMTPA 31% 43% LPG + LIQUID HYDROCARBON PETROCHEMICALS

12. CNG, PNG, CITY GAS DISTRIBUTION • Urban Pollution - A major issue • Successful Experience in Delhi, Mumbai • Currently in 10 cities • Plans to introduce CNG and city gas in28 cities CITY, CNG GAS SECTORS EMERGING AS AN IMPORTANT END-USE SEGMENT

13. GAS SECTOR INFRASTRUCTURE :CURRENT OUTLOOK • LNG Terminals – 2 Terminals (Dahej, Hazira), 7.5 MMTPA capacity • Transmission Network – 6,300 Kms • GAIL – 5,300 Kms • GSPL – 525 Kms • Assam Gas – 300 Kms • OIL – 175 Kms • Distribution Network – 6,000 Kms (Delhi, Mumbai, Ankaleshwar, Bharuch, Surat, Baroda, Agartala) • CNG Stations – 278 (Delhi, Mumbai, Surat, Vijayawada, Ankaleshwar, Bharuch,Baroda)

14. GAS SECTOR POLICY :SIGNIFICANT DEVELOPMENTS • 100% FDI in E&P under NELP • 100% FDI in natural gas pipelines • LNG imports, Gas Marketing under Open General Licence • Petroleum and Natural Gas Regulatory Board Bill under Finalisation (Unbundling, Third Party Access) • Gas Pipeline Policy under finalisation • Progressive Decontrol of prices • Policy Thrust to ensure Energy Security

15. DAHEJ I & II 10 mmtpa* HAZIRA 2.5 mmtpa COCHIN 5 mmtpa GAS SECTOR INFRASTRUCTURE:CURRENT AND FUTURE – A COMPOSITE PICTURE Turk-Afg-Pak-India Pipeline BHATINDA Iran-Pak-India Pipeline DELHI BAREILLY NEPAL BHUTAN FARIDABAD GANGTOK MATHURA AURAIYA LUCKNOW AGRA JAGDISHPUR MATHANIA DISPUR KANPUR ALLAHABAD PATNA GWALIOR SHILLONG PHOOLPUR VARANASI BANGLADESH KOTA JHANSI GAYA UJJAIN VIJAIPUR AGARTALA BOKARO SURENDARNAGAR AIZAWL RAJKOT INDORE AHMEDABAD KOLKATA JAMNAGAR MYANMAR-India Pipeline BHARUCH BARODA ANKLESHWAR A 1 BLOCK, MYANMAR SURAT DAMRA BHUBANESHWAR LNG PUNE MUMBAI DABHOL 5 mmtpa Existing (7.5 MMTPA) KRISHNAPATNAM SOLAPUR DABHOL Upcoming (22.5 MMTPA) RAJAMUNDRY HYDERABAD KOLHAPUR VIJAYAWADA Transmission Pipelines NELLORE Existing (6,300 Kms) BANGLORE Planned (8,400 Kms, US$ 4.2 Billion) HASAN CHENNAI MANGLORE City Gas/ CNG Existing (10 cities) TIRUCHCHIRAPALLI KANJIRKKOD COIMBTORE Planned (28 cities) KOCHI TUTICORIN TUTICORIN Gas By Sea Receipt (Likely Location)

16. Points of Concern • True implementation of unbundled system • Sourcing & customer tie-ups should be under the domain of Gas Trading activities • Minimum Excess capacity should be maintained • One uniform model of transportation tariff to be adopted.

17. Requirement of Provisions A. Financial • Direct taxes • Infrastructure status to cross country pipelines • Tax Holiday Benefits for Gas pipelines • Indirect taxes • Zero customs duty on supplies required for Natural Gas Pipelines • Zero custom duty on LNG/Natural Gas • ‘Declared Goods’ status to Natural Gas under Central Sales tax Act, 1956

18. Cont.. B. Technology • Development of Indigenous Steel Mills for API 5L grade steel production • Encourage Indigenous Steel Mills to produce API grade steel • Encourage new players in line pipe manufacturing and pipe laying C. Statutory • Single Window Clearance at State Level for all statutory clearances • Single Window Clearance at Center for Environmental Clearance and ROU Acquisition • Common Corridor for Transmission Pipelines

19. Thank You