future potential for lng terminals in the indian sub-continent
TRANSCRIPT
Future Potential for LNG Terminals in the Indian Sub-Continent
Presented by
Proshanto Banerjee Bangkok
February 28, 2013
3rd Asia Energy Security Summit 2013
Presentation Overview
― Why Natural Gas
― Current demand and production of natural gas in the Indian sub-
continent
― Future demand and production of natural gas in the Indian sub-
continent
― LNG and domestic gas pricing
― LNG Import capacity in the Indian sub-continent
― Near to mid term strategy for LNG import
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India Pakistan Bangladesh Sri Lanka
MTO
E
Oil Natural gas Coal
Nuclear energy Hydro electricity Renewables
Primary energy profile of the Indian sub continent
Source : BP Statistical Review 2011
― Clean fuel with lesser environment impact
― Abundantly available in recoverable form
― Affordable compared to crude oil based products
― Proven technological advancements
― Globalization of trade
Natural gas has emerged as a preferred source of energy
Consumption of Natural Gas in the Indian sub continent in 2011
Source : BP Statistical Review 2011
61.1
39.2
19.9
0 0
10
20
30
40
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70
India Pakistan Bangladesh Sri Lanka
BC
M
46.1
39.2
19.9
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69.15
54.88
29.85
1.5 0
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20
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India Pakistan Bangladesh Sri Lanka
BC
M
Domestic Supply Demand
Source : BP Statistical Review 2011
Production of Natural Gas in the Indian sub continent in 2011
Demand – Supply scenario of Natural Gas in Bangladesh
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40
50
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80
90
MM
SCM
D
Demand Production 82 MMSCMD
49.2 MMSCMD
Window of Opportunity for LNG Import - 11 MTPA
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MM
SCM
D
Demand Production
Window of Opportunity for LNG Import - 58 MMTPA
63 MMSCMD
273 MMSCMD
Demand – Supply scenario of Natural Gas in Pakistan
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SCM
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Production Demand
Window of Opportunity for LNG Import - 2.5 MMTPA
5 MMSCMD
14 MMSCMD
Demand – Supply scenario of Natural Gas in Sri Lanka
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600
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SCM
D
Demand Production
Window of Opportunity for LNG Import - 80 MMTPA
Note: Planning Commission of India envisage 70 MMTPA LNG imports by 2022
260 MMSCMD
550 MMSCMD
Demand – Supply scenario of Natural Gas in India
Demand of Natural Gas in the Indian sub continent by 2030
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India Pakistan Bangladesh Sri Lanka Estimated SubContinentShortfall
BC
M
Estimated Gas Demand Anticipated Domestic Production
Source : Various State Agencies
Lack of adequate reserves
— Lack of a market pricing mechanism
— Lack of market reforms in major end consumer
sector
— Lack of transportation and distribution network
— Uneven policy and taxation structure LNG appears to be an immediate solution to meet the increasing gas demand
Demand of Natural Gas in the Indian sub continent is unlikely to be fully realized
Global LNG liquefaction capacity
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A
APAC Africa Middle East America Europe
Expected to reach a minimum of 70 MMTPA
between 2012-15
EIA Scenarios for US Gas Exports
Post 2015 - Large capacity additions expected from North America subject to export permission in the next two years
• Given the number of projects that are currently applying for export license, the prospects of LNG export from North America appear to be strong
• Export license to non-FTA countries is critical for viability of US export projects
• Expected US LNG exports by 2020 are 70 mmtpa, in addition 20-30 mmtpa of LNG exports could come from Canada
Proposed and Potential LNG Export Projects in North America
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$/M
MB
tu
Japan European UK US Canada
Source : BP Statistical Review 2012
~ $ 11/MMBtu
Huge arbitrage opportunity exists between Henry Hub and JCC linked pricing
Source: WEO 2011 and other Public Sources
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Btu
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2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$/ M
MB
tu
Crude Oil Parity Price (JCC)
PLL Qatar (12.7 % JCC)
PLL Gorgon(14.5 % JCC )
Sellers Willingness (14.85% JCC)
Cheniere LNG Deal (Henry Hub Plus)
NBP Index (UK)
Henry Hub Index
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2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$/ M
MB
tu
Crude Oil Parity Price (JCC)
PLL Qatar (12.7 % JCC)
PLL Gorgon(14.5 % JCC )
Sellers Willingness (14.85% JCC)
Cheniere LNG Deal (Henry Hub Plus)
NBP Index (UK)
Henry Hub Index
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2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$/ M
MB
tu
Crude Oil Parity Price (JCC)
PLL Qatar (12.7 % JCC)
PLL Gorgon(14.5 % JCC )
Sellers Willingness (14.85% JCC)
Cheniere LNG Deal (Henry Hub Plus)
NBP Index (UK)
Henry Hub Index
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4
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8
10
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14
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18
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2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$/ M
MB
tu
Crude Oil Parity Price (JCC)
PLL Qatar (12.7 % JCC)
PLL Gorgon(14.5 % JCC )
Sellers Willingness (14.85% JCC)
Cheniere LNG Deal (Henry Hub Plus)
NBP Index (UK)
Henry Hub Index
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4
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8
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2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$/ M
MB
tu
Crude Oil Parity Price (JCC)
PLL Qatar (12.7 % JCC)
PLL Gorgon(14.5 % JCC )
Sellers Willingness (14.85% JCC)
Cheniere LNG Deal (Henry Hub Plus)
NBP Index (UK)
Henry Hub Index
2
4
6
8
10
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14
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18
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2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$/ M
MB
tu
Crude Oil Parity Price (JCC)
PLL Qatar (12.7 % JCC)
PLL Gorgon(14.5 % JCC )
Sellers Willingness (14.85% JCC)
Cheniere LNG Deal (Henry Hub Plus)
NBP Index (UK)
Henry Hub Index
Long term LNG prices are expected to mostly depend on Oil indexation and HH Prices
Seller comfortable (14.85 % JCC)
Future Outlook – Gas index/LNG Prices
4.2
3.37 3.06
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3.6
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India Pakistan Bangladesh
MM
BTU
Current domestic price of Natural Gas in the Indian sub continent
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9.83
16.19 17.77
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Australia North America Qatar Russia
MM
BTU
Current average delivered LNG Prices to India
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Existing(3 Terminals)
Under Construction(1 Terminal)
Planned( 15 Terminals)
Cap
acit
y (M
MTP
A)
India
LNG import scenario in the Indian sub continent
• The Government plans to build an LNG import terminal at Moheshkhali Island with a capacity of 5 MMTPA
• Signed MoU to import 4 MMTPA from Qatar Petroleum in January 2011
• Three bidders short listed to develop an FSRU based import terminal but no headway so far
• Recently, the government re-scheduled its target and is in the process of re-tendering or re-negotiating with the short-listed firms
LNG import plan of Bangladesh
• Pakistan’s first LNG policy was introduced in 2006 with private sector participation and without the Government’s physical or financial support
• The Government committed to support the projects, if needed, to secure long term LNG supplies but no guarantee was offered
• However, the private sector showed little enthusiasm for a highly capital intensive and risk prone business
• As a result the government initiated its own parallel LNG import project albeit through Government entity under the name Pakistan Mashal LNG Project (PMLP) in 2005-06
LNG import plan of Pakistan (1/2)
• In 2010, the contract for terminal development was awarded to 4GasAsia whereas GDF-Suez was awarded the LNG supply contract. However due to various issues, the project came to a standstill
• Recently, Pakistan has been considering to import LNG from Qatar via India
• India will receive LNG at one of its west coast terminals and supply gas through a planned pipeline to Pakistan’s border
• India has offered to supply 200 million cubic feet per day (mmcfd) of LNG for a period of five years
• India plans to expand its natural gas pipeline network across the border. It has already laid a 100 km pipeline to Bhatinda, from where the pipeline will be extended to Wagah bordering with Pakistan
LNG import plan of Pakistan (2/2)
• In response to a call for
proposals in 2001, the government of Sri Lanka received several proposals for the construction of LNG terminals. However, nothing was heard of these proposals thereafter
• The Ministry of Power and Energy had made a previous attempt to obtain LNG from Iran and an exchange of delegations had also taken place
LNG import plan of Sri Lanka
• A terminal of 1.7 MMTPA capacity was planned to be located in Kandana by Lanka Transformer Ltd.
• Increasing LNG affordability to create interest amongst suppliers
– LNG will flow to India where prices are sufficient and quantities can support the necessary infrastructure
• Indian LNG import depends on the amount of demand that can accept international market prices
• Three views of LNG import levels
– Assume only current and developing projects
– Assume a substantial expansion of LNG capacity
– Plants operate at 70% load factor
Conditions evolving for increased near term availability of LNG for India
Operating Terminals Location
Capacity
(MMTPA) Start Date
Petronet LNG Dahej I 5 2004
Shell Hazira 3.6 2005
Petronet LNG Dahej II 5 2009
GAIL Dabhol 5 2011
Total Operating Capacity 18.6
Terminals
Under Construction Location
Capacity
(MMTPA) Start Date
Petronet LNG Kochi 2.5 2012-13
Total Under Construction Capacity 2.5
Around 21 MMTPA of LNG import capacity is available by 2013
Planned Terminals Location
Capacity
(MMTPA) Start Date
GSPC - Adani Mundra 5 2016-18
Swan Energy Pipavav 3 2016-19
H-Energy Jaigarh 8 2016-17
IOCL Ennore 5 2016-18
Petronet LNG Gangavaram 5 2017-18
GAIL Kakinada 3 2016-18
Shell Kakinada 3 2016-18
IOCL Dhamra 5 2017-18
H- Energy Offshore Digha 4 2016-17
Total Planned Capacity 41
India’s total LNG import capacity by 2019 – 62.1 MMTPA
41 MMTPA of LNG import capacity is in the planning stage
Planned LNG Import Terminals in India
Petronet LNG – Dahej
Shell – Hazira
GAIL – Dabhol
GSPC – Mundra
Swan Energy – Pipavav H-Energy – Jaigarh
Petronet LNG – Kochi
IOCL – Ennore
Petronet LNG – Gangavaram
GAIL – Kakinada
H-Energy – Offshore Digha
IOCL - Dhamra
• Despite all the hurdles and a multitude of various policy initiatives, imports of LNG are expected to be the only path forward for the energy security of Pakistan and Bangladesh in the near to medium term
• In the next 3 to 4 years, LNG must be available in these countries to meet the expected gas shortage
• The Indian sub continent could learn a lot from the European and US - Canada examples of sharing infrastructure, economics and mitigating risks
• For the short term , India can be treated as an LNG importing hub and regasified LNG can be supplied to Bangladesh and Pakistan through onshore pipelines extending across borders
India can provide an immediate solution to Pakistan and Bangladesh’s rising gas shortages
• Additional gas from domestic supply in near term is unlikely
• There is significant demand to support LNG price
• Increasing demand – supply gap can be compensated only through LNG imports but:
⁻ Quantum of LNG imports will depend on the volume of demand that can accept international market prices
⁻ Price should be right (especially from Power and Fertilizer industries) to attract LNG players
⁻ LNG infrastructure building needs to continue • An integrated LNG souring approach can put the Indian sub-
continent players in the commanding position while negotiating the contracts and risks related to market forces
The Indian sub continent could emerge as the next importing hub since………
Thank You
For any Information please contact
Proshanto Banerjee at
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