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A.P. Gas Distribution Corporation (A Joint Venture of APGIC and GAIL Gas Limited)

Infrastructure, Petroleum and Gas : Key Enabler for successor states. A.P. Gas Distribution Corporation (A Joint Venture of APGIC and GAIL Gas Limited). Vizag 20 September 2014. Objectives of the session. Opportunities for establishing infrastructure facilities

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A.P. Gas Distribution Corporation (A Joint Venture of APGIC and GAIL Gas Limited)

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  1. Infrastructure, Petroleum and Gas : Key Enabler for successor states A.P. Gas Distribution Corporation (A Joint Venture of APGIC and GAIL Gas Limited) Vizag 20 September 2014

  2. Objectives of the session • Opportunities for establishing infrastructure facilities • Developing petroleum and gas corridors • Infrastructure as pre-requisite for industrial growth and economic activities • PPP model: Pros & cons

  3. Disclaimer The following presentation and views are for information purpose only and are express personal opinion of the speaker. These are not endorsed by GAIL , APGDC or GoAP. Audience may independently verify before taking action and speaker does not held any responsibility for accuracy of information contained therein.

  4. Presentation Outline • Successor States: Value unlocking in Oil & Gas Sector • Introduction of APGDC • Transmission & Distribution Infrastructure • Oil and Gas production infrastructure • LNG Import facilities • Refineries & Product / LPG Pipelines • Oil & Gas Infrastructure : Key enabler of growth • Key drivers and Challenges

  5. Value unlocking in Oil & Gas Sector To Bhilwara Successor States • Specific priorities in individual states • Focussed Industrial development • Decentralization – towards inclusive growth • Deeper focus in Oil & Gas in A.P. : production, import, Distribution & export to other states • Telengana : Acts as consumption centre as well as transit corridor • Paradigm change & New Synergy with other states : New product pipeline (from Paradip), power transmission from Gujarat, Gas pipeline from Bangalore /Ennore To Ankot (Gujarat) MBVPL (GITL) EWPL (RGTIL) Gangavaram Kakinada Offshore Gas fields (RIL, ONGC, Cairn, GSPL) GAIL KG Basin Network Legends: GAIL KG Network: EWPL (RGTIL) : MVPL (under const): P/l under bidding : LNG Terminals planned: Gas Fields : Krishnapatnam DhabolBangaore (GAIL) ENPL Ennore

  6. Value Unlocking : Andhra Pradesh • Population : 4.94 crores • Coastline : 972 km , Second longest in India, next to Gujarat • Gross State Domestic Product (GSDP) : Rs. 2,35,930 Cr (US$39 billion) in 2012-13 • Industries : IT, Boitech, Pharma, Oil & gas, Power, Banking & Financial, Tourism, Textiles, Retail, Leather • Oil & Gas : Oil & Gas reserves (KG Basin) Refinery, Petroleum Import, pipelines, Gas Based IPPS

  7. Value Unlocking : Telengana • Population : 3.52 crores • Mineral-rich state, with coal reserves at Singaerni Collieries • Gross State Domestic Product (GSDP) : Rs. 3,35,018 Cr in 2012-13 • Industries : IT, Boitech, Tourism • Power : Coal, Hydel based

  8. Introduction of APGDC

  9. APGDC – An Introduction • APGDC Limited incorporated on 10.01.2011 by APGIC • Equity Structure: APGIC :50% ; GAIL Gas : 50% with each to offload 25% to Private/Public Investors • APGIC : Joint Venture of APIIC with 51% and APGENCO with 49% • GAIL Gas : Wholly owned subsidiary of GAIL (I) Ltd. • Authorized capital is Rs. 100 Crores and paid up as on date is Rs. 20 Crores. APGIC and GAIL Gas paid Rs. 10 Crores each. • Objectives and Business Plan, as developed through KPMG: Development of Natural Gas regional pipeline grid across the state of AP; City Gas Distribution to cover various Major cities of AP.; and creation of LNG infrastructure in the East Coast for import of Gas, etc.

  10. APGDC – An Introduction • Vision • To be the leader in sourcing, • transporting and distributing • natural gas in Andhra Pradesh , • and beyond by maximizing • value creation for all • stakeholders in an • environmentally sustainable • manner. • Objective : • To Design , Develop and construct Gas pipeline and gas distribution systems, Gas processing, Liquefaction, Re-gasification plants and to import, store, process, transport, distribute natural gas • To develop gas distribution networks in the state of Andhra Pradesh • To Source natural Gas : through import or domestic Mission Making Andhra Pradesh a Natural Gas driven economy

  11. MOU with Govt of A.P. • MOU signed between APGDC and GOAP during Partnership Summit, 14 Jan, 2012 • To lay Dedicated natural gas pipeline from Kakinada to Vishakhapatnam • To lay regional pipeline grid • GOAP would facilitate permissions and clearances • MOU Signed between GAIL Gas / APGDC and GOAP during Partnership Summit, 14 Jan, 2012 • To set up of FSRU and On land terminal through APGDC. • GOAP would facilitate permissions and clearances

  12. Division of A.P. State : Value unlocking in Oil & Gas Sector • Introduction of APGDC • Transmission & Distribution Infrastructure : • Existing Pipelines • Transmission & Distribution Infrastructure • Unified AP Gas grid • Oil and Gas production infrastructure • LNG Import facilities • Refineries & LPG Pipelines • Oil & Gas Infrastructure : Key enabler of growth • Key drivers and Challenges

  13. India : NG Vs Total Energy trend • Share of Natural gas in the Energy Basket : 24 % • There is marginal decline in 2013 • Share of Natural Gas is in increasing trend in longer term Data Source : B P Statistical Review 2014

  14. Natural Gas Consumption • Share of Natural gas consumption as part of total primary energy : Slow but steady growth • Natural Gas consumption is sizable and significant role in longer term Data Source : B P Statistical Review 2014

  15. A.P. natural gas demand: salient features Existing Demand (in MMSCMD) • Market Study and Business Plan completed by M/s KPMG: • Existing shortfall:13.6 MMSCMD • Additional prospective demand (in existing plants): 12.4 MMSCMD • Due to drastic reduction in domestic gas production, huge Investments made by power plants threatened to become stranded assets • Power is the first customer base in AP: • Affordability of RLNG is a key issue, • Pipeline connectivity required to mitigate the risk of power shortage. Future Demand (in MMSCMD)

  16. Gas Distribution Infrastructure To Bhilwara To Ankot (Gujarat) MBVPL (GITL) EWPL (RGTIL) Gangavaram Kakinada Offshore Gas fields (RIL, ONGC, Cairn, GSPL) GAIL KG Basin Network Legends: GAIL KG Network: EWPL (RGTIL) : MVPL (under const): P/l under bidding : LNG Terminals planned: Gas Fields : Krishnapatnam DhabolBangaore (GAIL) ENPL Ennore

  17. Gas Pipelines

  18. Andhra Pradesh Gas Grid Srikakulam • Objective : to transform economy of A.P. To gas based economy • APGDC has made demand assessment and feasibility studies across the state through M/s KPMG • Expression of interest (EOI) to PNGRB, on behalf of the GoAP , for following sections : • Kakinada Srikakulam • Ennore Nellore Pipeline • Nellore Vijaywada pipeline • APGDC has emerged as successful bidder and has been authorized by PNGRB to lay pipeline from Kakinada to Srikakulam V’nagaram Anakapalli Vizag Tuni R’mundry V’wada Kakinada Guntur Ongole Nellore Renigunta GAIL P/L EWPL (RGTIL) APGDC Authorized P/L P/L under biding EOI Proposed Existing CNG locations Proposed CNG Locations DBPL

  19. Salient Details of KSPL • From Kakinada to Srikakulam • Total length : 301 km ( Main Line ) • Sources : • Kakinada LNG • Gangavaram LNG • KG Basin ONGC/ RIL KG D-6 / Ravva fields. • Demand Centres: • KG Basin, Kakinada SEZ, MBBVPL, EWPL • Visakhapatnam, PCPIR • Vizyanagram, Bobbilee Ind. Area • Srikakulam

  20. AUTHORIZATION BY PNGRB • Bid invited by PNGRB: 20th June, 2013 • Letter of Intent issued : 05th June, 2014 • Performance Bank Guarantee: Rs. 10.13 crore • Letter of Authorization Issued : 16thJuly, 2014 • Now Open for booking of capacity by Consumers/ Customers

  21. Project Implementation schedule Critical Path :

  22. Andhra Pradesh Gas Grid: An early Imperative Srikakulam • Gas Sources/ Inputs: • Existing: KG Basin • Proposed : Kakinada, Gangavaram, Krishnapatnam, Ennore, DBPL • Gas Grid to Cover all 13 districts of A.P. • Approx. Length : 1600 km • Approx. Investment : 4200 Cr. V’nagaram Anakapalli Vizag Tuni R’mundry V’wada Kakinada Guntur Ongole Karnool Nellore Anantpur Renigunta GAIL P/L EWPL (RGTIL) APGDC Authorized P/L P/L under biding EOI Proposed Gas Sources/ Inputs: Chitoor DBPL

  23. A. P. Gas Grid

  24. Infrastructure Investment & Financial viability • Investment in Order of magnitude Cost : Rs. 4200 crore • Schedule : • Immediate : Kakinada – Srikakulam , Vijaywada – Nellore , Ennore – Nellore • Next 3-5 years : Anantpur – Karnool- Renigunta • Linked with Gas availability, Landed cost • Transportation Cost : 5- 15 Rs./ MMBTU , Nominal compared to gas cost

  25. Gas Distribution : CGD and CNG Srikakulam • Existing CGD : • Kakinada • Rajahmundry • Vijaywada • Proposed CGD and CNGS : • Vizag • Viajayanagaram • Srikakulam • Guntur • Ongole • Nellore • Renigunta V’nagaram Anakapalli Vizag Tuni R’mundry V’wada Kakinada Guntur Ongole Nellore Renigunta GAIL P/L EWPL (RGTIL) APGDC Authorized P/L P/L under biding EOI Proposed Existing CNG locations Proposed CNG Locations DBPL

  26. Telengana: Gas Infrastructure • 2 Major Gas grids passing through the state: • EWPL(RIL) , MBVBPL (GSPL) • Ramgundam : Gas based Fertlizer • City Gas Distribution and CNG stations • Currently at Hyderabad • Notified for bidding : Nalgonda, Khamam, MedakRangareddy MBVBPL EWPL VSPL (LPG)

  27. Division of A.P. State : Value unlocking in Oil & Gas Sector • Introduction of APGDC • Transmission & Distribution Infrastructure • Oil and Gas production infrastructure • LNG Import facilities • Refineries & LPG Pipelines • Oil & Gas Infrastructure : Key enabler of growth • Supports from State Govts and Central Govt. • Key drivers and Challenges

  28. Proved reserve of Natural Gas: India • Production in 2013 :33.7 Billion Cu m equivalent to average of 92.3 MMSCMD • Reserve to production ratio of 40.2, vs-a-vis world average of 55.1 Data Source : India Pet & NG statistics 2012-13

  29. Oil & Gas Production Srikakulam • Krishna Godavari Basin in Andhra Pradesh : • Oil and Gas Discoveries • Onshore and Offshore • Production by Private and Govt Companies • More exploration in progress V’nagaram Anakapalli Vizag Tuni R’mundry V’wada Kakinada Guntur Machlipatnam Ongole Nellore Krishnapatnam Renigunta DBPL

  30. KG Basin : Exploration & Discoveries • More than 225 prospects have been probed by drilling of more than 557 exploratory wells. • Hydrocarbon accumulations have been proven in 75 of these prospects • Oil : 22 • Gas : 53 Source : DGH

  31. Oil & Gas discovery in KG Basin Onshore • 141 prospects have been probed by 375 exploratory wells by ONGC, • 11 oil & gas pools • 31 gas pools have been discovered • Most of them are on production. • Offshore: • 84 prospects have been probed by 182 exploratory wells . • Hydrocarbon accumulations have been proved in 33 : • 11 oil & gas and 22 gas prospects • 3 discovery by ONGC in the block KG-DWN-98/2 within Plio-Pleistocene sandstone of Godavari formation and • About 19 discoveries have been made by Pvt./JV companies so far in NELP blocks • 15 Dhirubhai discoveries by RIL in blocks KG-DWN-98/3 and KG-OSN-2001/2, • 3 discoveries by Cairn Energy Pty. Ltd. (CEIL) in block KG-DWN-98/2 within Mio-Pliocene, • 1discovery by GSPC in block KG-OSN-2001/3 within Lower Cretaceous).

  32. Division of A.P. State : Value unlocking in Oil & Gas Sector • Introduction of APGDC • Transmission & Distribution Infrastructure • Oil and Gas production infrastructure • LNG Import facilities • Refineries & LPG Pipelines • Oil & Gas Infrastructure : Key enabler of growth • Key drivers and Challenges

  33. LNG Projects in East India LNG Terminals planned in East Coast: FSRU based : • Kakinada (2 nos.) • Krishnapatanam • Paradip • Digha • Karaikal Land based terminal: • Gangavaram • Ennore Digha Paradip Gangavaram Kakinada Krishnapatanam Ennore FSRU (In progress) Karaikal FSRU (Planned) Land based LNG terminal

  34. LNG Import in East Coast : Advantage • LNG Import on the East Coast • In case the LNG Import facility is located on the East Coast in AP, then the delivered price will be lower at least by 4 US Dollar due to the avoidance of additional taxes and transportation charges • Therefore, an LNG Import facility on the east coast can meet the demand shortfall economically when compared to the RLNG terminals on the West coast • Further, towards open access of terminal, power plants can make high sea purchase, where tax component becomes nil, and no customs duty, thereby making more viable 20.36 LNG un loaded on the West Coast & delivered in AP 15.68 LNG un loaded in East coast & delivered in AP

  35. Kakinada FSRU : Project Layout Onshore Receipt Facility Offshore Pipeline Widening of Channel Existing Channel Break Water FSRU Basin Fishing harbor K D W P

  36. FSRU : Configuration vis-à-vis Jetty , Island Break water FSRU Jetty LNG Carrier

  37. PLL LNG Terminal • land based Liquified Natural Gas (LNG) Terminal at Gangavaram Port • Petronet LNG Limited (PLL) signed a firm and binding term sheet with Gangavaram Port • Initial capacity of 5.0 MMTPA expandable to 10 MMTPA • MoEF Environmental Clearance ObtainedSchedule : 4-5 Years

  38. PLL LNG Terminal • Close to Vizag Market- but no gas based Industry at present • Breakwater : does not exist for Isolated LNG berth • Availability : Dedicated LNG berth, if made outside harbour is operable only for 250 days. • Land availability : Adequate land not available. Area to be re-claimed from sea and hill cutting involved • Pipeline Connectivity : None

  39. Division of A.P. State : Value unlocking in Oil & Gas Sector • Introduction of APGDC • Transmission & Distribution Infrastructure • Oil and Gas production infrastructure • LNG Import facilities • Refineries & Product / LPG Pipelines • Oil & Gas Infrastructure : Key enabler of growth • Key drivers and Challenges

  40. Refineries & Product/LPG Pipelines • Vizag Refinery (HPCL) • Capacity 8.3 MMTPA • Petrol, HSD, LPG, FO, lubricants • VSPL LPG Pipeline (GAIL : 600 Km, 1.4 MTPA • VVSPL Product P/L (HPCL) • Bottling Plant, POL Terminals (OMCs) – Vizag, V’wada, S’bad • Proposed : • Refinery & Petrochem : Machlipatnam • PCPIR – Viazg - Kakinada Machlipatnam Existing Refinery Planned Refinery & pet.chem LPG/ Prduduct P/L Corridor PCPIR

  41. Division of A.P. State : Value unlocking in Oil & Gas Sector • Introduction of APGDC • Transmission & Distribution Infrastructure • Oil and Gas production infrastructure • LNG Import facilities • Refineries & LPG Pipelines • Oil & Gas Infrastructure : Key enabler of growth • Key drivers and Challenges

  42. Oil & Gas Infra : Key enabler to Industries • Fertilizer • Power • Petrochemicals • City Gas Distribution • CNG & Transportation • Ceramics, Glass • Other Industries Oil & Gas Infrastructure

  43. Oil & Gas Infra : Key enabler to Industries • Should be efficient and cost effective • Available • Affordable • Environment friendly • Sustainable • To meet Govt Priorities Oil & Gas Infrastructure : Key Characteristics

  44. Division of A.P. State : Value unlocking in Oil & Gas Sector • Introduction of APGDC • Transmission & Distribution Infrastructure • Oil and Gas production infrastructure • LNG Import facilities • Refineries & LPG Pipelines • Oil & Gas Infrastructure : Key enabler of growth • Key drivers and Challenges

  45. Key Drivers for Oil & Gas Infrastructure • Industry and market Demands • Moderate and sustainable Crude and LNG price regime in International Market • Private sector participation and FDI • Govt Facilitation: • Approvals • Land availability and acquisition ease • Taxation regime – Equitable to gas sector and long term growth oriented • Allocation / allotment of domestic gas to local / State Govt

  46. Key Challenges • Higher prevailing LNG pricing : impediment to import • Power Plants : Power tariff capped- hence gas price has to be competitive • Huge initial Capital Investment • PNGRB Bidding in gas pipelines : Assymatry , unhealthy competition

  47. Thank You

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