Ensuring Natural Gas For Power Sector

PRESENTATION FLOW GAIL : A BRIEF PROFILE CURRENT ENERGY SCENARIO IN INDIA POWER SECTOR SNAPSHOT NATURAL GAS AVAILABILITY IN INDIA GAS SUPPLY OUTLOOK GAS SOURCING OPTIONS CONCLUSION

AN INTEGRATED GAS MAJOR GAIL – AN INTEGRATED GAS MAJOR

Mission Vision GAIL’S MISSION & VISION Formed in 1984 as Gas Authority of India Limited with “TO ACCELERATE AND OPTIMIZE THE EFFECTIVE AND ECONOMIC USE OF NATURAL GAS AND ITS FRACTIONS TO THE BENEFIT OF NATIONAL ECONOMY.” Mission In 2002 Changed name As GAIL (India) Ltd redefined “BE THE LEADING COMPANY IN NATURAL GAS & BEYOND, WITH GLOBAL FOCUS, COMMITTED TO CUSTOMER CARE, VALUE CREATION FOR ALL STAKEHOLDERS AND ENVIRONMENTAL RESPONSIBILITY” Vision

GAIL – SCALE OF OPERATIONS GAS PIPELINES 5,600 KMS (133 MMSCMD) 11 States LPG PIPELINES 1922 KMS (3.8 MMTPA) NATURAL GAS PIPELINE GANDHAR VAGHODIA USAR VIJAIPUR LAKWA TRIPURA KG BASIN VSPL CAUVERY BASIN HVJ, DVPL JLPL RAJASTHAN LPG PIPELINE LPG PLANT PATA PETROCHEM PLANT GAS PROCESSING 7 Plants (1.2 MMTPA LPG) PETROCHEMICALS 310,000 TPA

GAIL – SCALE OF OPERATIONS OFC Connectivity 13,000 KMS E&P 16 blocks (3 – Farm In Blocks) R-LNG PLL- Dahej (5MTPA) Gas Retailing (8 JVs) IGL,MGL,BGL,CUGL,GGL, MNGL,TNGCL, AGL Power 156 MW GSEG, Hazira Globalization Subsidiary 100% subsidiary – GAIL Global Retail Gas Fayum Gas, Shell CNG, China Gas & NAT Gas OFC CONNECTIVITY E&P BLOCKS INDIA DAHEJ LNG TERMINAL MYANMAR BLOCK CITYGAS

TRACK RECORD OF STEADY GROWTH FINANCIAL PERFORMANCE In Rupees Crores Consistent growth in Top & Bottom line 5 years CAGR for Revenue =10 % 5 years CAGR for PAT = 15% Profit After Tax Revenue TRACK RECORD OF STEADY GROWTH

Current Energy Scenario

World Primary Energy Consumption, 2005 India is the Fifth Largest Energy Consuming nation Source: BP Stats 2006

World Per Capita Total Primary Energy Consumption, 2003 Low per capita Cn Monthly Per capita consumption in India of : Kerosene (Ltrs) 0.57(Rural), 0.71 (Urban) LPG (KG) 0.14 (Rural) & 1.31 (Urban) Petroleum Products 108.1 KG (2002-03) Naptha 11.5 KG (2002-03) Motor Spirit 7.3 KG (2002-03) HSDO 35.5 KG (2002-03)

Energy intensity High Energy Intensity BTU per USD Total Primary Energy Consumption per Dollar of GDP , 2003 High specific energy consumption by Industries : Poor fuel use efficiency and Conservation norms Energy savings potential in India: 23%

Energy Source 2003-04 2026-27 % Increase Oil 119 365 207 Coal 167 622 Primary Commercial Energy Consumption/Demand in India (8% GDP growth scenario) Mtoe Energy Source 2003-04 2026-27 % Increase Oil 119 365 207 Coal 167 622 272 Hydro 7 29 314 Natural Gas 135 366 Total Primary Energy Supply 327 1222 274 Nuclear energy contribution to increase substantially ~ 13 times Source: Integrated Energy Policy

POWER SECTOR SNAPSHOT

World Total Electricity Generation = 16661 TWh Power Generation in the World 2003 Fuel Shares of Electricity Generation World Total Electricity Generation = 16661 TWh *Other includes geothermal, solar, wind, combustible renewables & waste. Source : IEA-2005

Fuelwise Installed Capacity Power Capacity Profile In India, 2003-04 Fuelwise Installed Capacity (Total Generation : 556.175 Billion KW)

Generating Capacity In India Installed capacity around end of the period (MW)

Natural Gas Demand & Availability in India

Sectoral Gas Consumption, 2004-05 Indian Gas Sector Sectoral Gas Consumption, 2004-05

Accounts for 9% of commercial energy consumption Natural Gas Accounts for 9% of commercial energy consumption Consumption ~ 31 BCM(2004-05); Projected to grow around 3/4 times by 2025 Power and Fertiliser sectors account for 2/3rd of the total consumption Present demand estimated around 71 BCM Primary uses: Power 39% Fertilizer 27% Captive Use/LPG Shrinkage 16% Industrial Fuel 12% Others 6%

Natural Gas Demand Scenario Years Quantities (in MMSCMD) 2006-07 231 2011-12 313 2024-25 391 As projected by Hydrocarbon Vision - 2025

Sustainability of domestic reserves, 2004-05 Fuel Type Reserves* Prod. (per yr) Cons. R/P Ratio Oil (Million MT) 786 33.98 127.12 23 Natural Gas (BCM) 1101 31.78 30.79 35 Coal (BMT) 210 0.38 0.44 243 If R/P Ratios calculated for proved + Indicated reserves OIL Unchanged Gas 58 BCM( incldg RIL, GSPC etc) Coal 297 BMT Source: Integ Energy Policy and MOPNG Petstat Statistics, 2005 *Proved & Indicated reserves as on 1.4.2005; R/P ratio derived for Proved reserves

Current Scenario- Power Sector No. of gas based power plants : 43 Installed capacity : 10999 MW Gas requirement : 53.9 MMSCMD Current Total supply : 36.6 MMSCMD Current Supply by GAIL : 27.4 MMSCMD Existing Shortfall : 17.3 MMSCMD

Gas Availability Projections (MMSCMD) SOURCE AVAILABILITY (Projected) 2005-06 2011-12 DOMESTIC ONGC 51 30 OIL 4 8 JV / PVT. 20 67 SUB TOTAL 75 105 LNG QATAR 18 27 SHELL Spot 9 IRAN 54 TOTAL 93 159 Large deficit between demand and availability

Gas Supply Augmentation TURKMENISTAN New Gas Discoveries at Eastern Cost Myanmar Upcoming LNG Terminals Dabhol Kochi Cross Border Pipeline CBM DAHEJ I & II 10 mmtpa* IRAN HAZIRA 2.5 mmtpa VIJAIPUR BANGLADESH DAHEJ JAMNAGAR KOLKATA HAZIRA BHUBANESHWAR MUMBAI PUNE A 1 BLOCK, MYANMAR MYANMAR VIZAG DABHOL DABHOL 5 mmtpa KAKINADA KRISHNAPATTANAM NEW GAS DISCOVERIES LNG TERM’s- Upcoming LNG TERM’s- Existing TRANS – NATIONAL P/L CBM CHENNAI KOCHI 5 mmtpa TIRUCHCHIRAPALLI KOCHI MANAPPAD

Gas Sector Infrastructure: Current And Future Iran-Pak-India Pipeline Turk-Afg-Pak-India Pipeline TOTAL INVESTMENT – US$ 8 Billion BHATINDA DELHI BAREILLY DAHEJ I & II 10 mmtpa* HAZIRA 2.5 mmtpa AURAIYA LUCKNOW KOTA MATHANIA GWALIOR AGRA JAGDISHPUR KANPUR DISPUR KOLKATA GAYA BOKARO VARANASI PATNA MYANMAR-India Pipeline A 1 BLOCK, MYANMAR PHOOLPUR JHANSI UJJAIN VIJAIPUR INDORE AGARTALA RAJKOT JAMNAGAR AHMEDABAD DAMRA PUNE BHARUCH DABHOL BHUBANESHWAR KRISHNAPATNAM BARODA SURAT LNG Existing (7.5 MMTPA) Transmission Pipelines Existing (6,300 Kms) MUMBAI DABHOL 5 mmtpa COCHIN SOLAPUR RAJAMUNDRY VIJAYAWADA Upcoming (15 MMTPA , US$ 2 Billion) HASAN BANGLORE KOLHAPUR HYDERABAD NELLORE Planned (8,400 Kms, US$ 4.5 Billion) CHENNAI TUTICORIN TIRUCHCHIRAPALLI City Gas/ CNG Existing (10 cities) COIMBTORE MANGLORE KOCHI KANJIRKKOD Planned (28 cities, US $ 1.8 Billion) Gas By Sea Receipt (Likely Location) LNG Terminal

Need to set up a Nation-wide Gas Grid Equitable geographical distribution Connecting Demand Centres to the Supply Sources: high investment requirement Ready market access to the producers Create choice to customers Demand-Supply Management

Scale of Investments Required (next 5 years) In billion USD, approx Exploration & Production : 10 LNG Terminals/Re-gasification : 2 Domestic gas grid : 4.5 Cross Border pipelines IPI : 7.1 TAPI : 3.3 Myanmar India : 2.9 Downstream Sectors Power & Fertiliser : 5-6 Gas Retailing (CNG, Auto LPG, Residential) : 1.8 Total projected estimates ~ USD 35 Billion, subject to projects materializing

Challenges Many of these gas resources are “stranded” making Creating market driven market Creating upfront Infrastructure Regulatory framework to attract & encourage investments in infrastructure Sound energy security structures for cross border trade Creating institutions for development of technology, standards and skilled manpower Bridging geographic disparity between gas resources and demand centres Synchronize transportation infrastructure with gas availability Massive investment Many of these gas resources are “stranded” making them commercially non-exploitable

CONCLUSIONS… Proactive initiatives taken by Government for sourcing gas from domestic and international sources Concurrent connectivity to demand centres- planned by GAIL Prompt response to market reality essential Gas sourcing long term phenomenon Capacity additions to match availability of gas

CONCLUSIONS Early capacity bookings will facilitate required energy sourcing and ensure infrastructure development Currently, limited international sources of LNG As an immediate step Power plants using Naphtha can switch over to spot RLNG which is cheaper by 30-40%. Most of additional demand for power generation to be met through LNG which is aligned to international market. Power sector will have to be prepared to pay higher price for energy in future in line with global trend.

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