Challenges of Developing Natural Gas Infrastructure in India

Presentation Flow Demand- Supply Scenario End-Use Outlook 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

INDIAN GAS SECTOR: SUPPLY OUTLOOK CURRENT SUPPLIES (2005-06) CURRENT SUPPLY SOURCES BCM (TCF) Domestic Production 32 (1.1) Domestic Availability 27(1.0) LNG Imports* 6(0.2) Total Availability 33(1.2) 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)

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

SUPPLY-DEMAND OUTLOOK : EMERGING SCENARIO SUPPLY BCM TCF SUB TOTAL FROM CURRENT SOURCES (2012) 26 0.9 TOTAL NEW DISCOVERIES 36 1.3 SUB TOTAL NEW LNG IMPORTS 24 0.8 TOTAL (PROJECTED CURRENT SOURCES + NEW DICOVERIES + NEW LNG) 86 3.0 DEMAND (BY 2012) 114 4.0 DEMAND (BY 2025) 143 5.0 PROJECTED SHORTFALL (2012) 28 1.0 PROJECTED SHORTFALL (2025) 57 2.0

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

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 SUPPLY BCM TCF NEW PIPELINE IMPORTS - Iran-Pakistan-India - Turkmenistan-Afghanistan-Pakistan-India - Myanmar-India 32.8 21 09 1.2 0.7 0.3 TOTAL PIPELINE SUPPLIES 52 1.8 TRANSNATIONAL PIPELINES TO PROVIDE COST EFFECTIVE SUPPLY SECURITY

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

SUPPLY OUTLOOK : ADDITIONAL SOURCES COAL BED METHANE (CBM) INSITU COAL / LIGNITE GASIFICATION SURFACE COAL GASIFICATION 16 blocks awarded under 2 CBM rounds Estimated reserves ~ 1400 – 2600 BCM (50 – 92 TCF) Equivalent to 40 - 75 yrs of current levels of natural gas consumption First CBM Gas Expected by 2007 Total potential – 15,820 BCM (565 TCF), as per projections of UK based UCG Parnership Equivalent to 450 - 500 yrs of current levels of natural gas consumption Focus Areas - 5 States (Gujarat, Rajasthan, TN, AP, W Bengal) Total Coal Reserves – 247 BT Focus Areas – 2 States (Orissa, W Bengal) Syn gas potential identified 2.3 BCM (0.1 TCF)

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

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

CNG, PNG, CITY GAS DISTRIBUTION  Segment Total Vehicles 259836 Domestic 413115 Commercial 2664 Small Industries 559 Gas Used (BCM) 1.86 Urban Pollution - A major issue Successful Experience in Delhi, Mumbai Currently in 10 cities Plans to introduce CNG and city gas in 28 cities CITY, CNG GAS SECTORS EMERGING AS AN IMPORTANT END-USE SEGMENT

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)

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

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

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.

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

B. Technology C. Statutory Cont.. 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

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