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LNG USAGE IN EXPANDING INDIAN ECONOMY

LNG USAGE IN EXPANDING INDIAN ECONOMY. DEPLETING EARTH RESOURCES.

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LNG USAGE IN EXPANDING INDIAN ECONOMY

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  1. LNG USAGE IN EXPANDING INDIAN ECONOMY

  2. DEPLETING EARTH RESOURCES Given the vast quantity of yet to be discovered gas resources including hydrates, natural gas could become one of the primary energy supply by 2100. Current Use of 95 TCF/year should be able to expand to 500 TCF by 2100 without any restrain on resources. M.A.Adelman, WGC 2003

  3. GLOBALISING LNG TRADE

  4. WHAT IS IN FUTURE FOR LNG BUSINESS? • Big rush to procure gas & LNG • What should be the benchmark price ? • How much speculative volumes are physically traded ? • Relationship between gas prices USA and Katrina. • Should LNG business remain long term or short term ? • Are prices sustainable in long term ?

  5. ADDING NEW LNG CAPACITIES - ATLANTIC AND PACIFIC (IN MMT) SUPPLIES BASED ON /SPA/HOA/MOU SIGNED (2010) Source : Petroleum Economist

  6. LNG A FUEL OF CHOICE IN INDIAN MARKET • Full 5 MMTPA sold from Dahej • Consumers are demanding more volumes • 3 cargoes purchased by Shell in 2005 • 1 Cargo received on spot basis April 2006 • Consumers are ready to pay market price

  7. LNG NEEDS – GROWING SUPPLY GAP • Large Demand supply gap • Scope for LNG imports • Developing LNG market • Import parity LNG price is viable • Changing mind set to accept the market price

  8. LNG DEMAND WILL RISE STRONGLY TO BRIDGE THE NATURAL GAS DEFICIT IN INDIA

  9. PRICING OF GAS IN INDIA • Gas Suppliers $/MMBTU (in Net Heating Value) • NOCs : 1.84 to free pricing with restrictions • JVs : 4.75 to free pricing • Private : 4.08 - 5.00 • LNG : 3.86 • Spot LNG : 10-11 $/MMBTU • Gas prices becoming market driven.

  10. AFFORDABILITY OF LNG FOR POWER • Rational fuel mix for power generation • Natural gas provides Higher efficiencies • Lower capital cost • Need for developing peak load power • Lower emissions Cost of Power Generation with gas (Cents/kwh)

  11. AFFORDABILITY OF LNG FOR POWER PEAK & BASE LOAD Cost of Power (Base Load) Cost of Power (Peak Load) • Assumptions • Peak and base load generation viable 6 to 7 $/MMBTU • Station Heat Rate – 1850 Kcal / Kwh (47% Efficiency) • 46% efficiency for gas engines • 38% efficiency for gas turbines • capital cost of 1 Crore/MW as per Wartsila

  12. NETBACK PRICE OF LNG WITH IMPORT PRICE PARITY OF UREA Netback price of LNG with imported Urea

  13. CONCLUSION • High demand of natural gas • Ideally located to import gas by LNG route. • Consumers shifting to market price of gas • 2 spot cargoes received this summer • Market accepts spot price • Is it too late to sign long term deals • What signals Indian market giving to suppliers

  14. THANKS

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