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Roundtable on Challenges to

Roundtable on Challenges to. Development of Gas Infrastructure. Perspectives of a commercial LNG venture. Hazira – Creating a Long Term Market Position Target Market: Demand (7-30 mtpa) Delhi Middle. East Hazira LNG Import Terminal:. Dahej Hazira Mumbai. Start up April 2005

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Roundtable on Challenges to

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  1. Roundtable on Challenges to Development of Gas Infrastructure Perspectives of a commercial LNG venture

  2. Hazira – Creating a Long Term Market Position Target Market: Demand (7-30 mtpa) Delhi Middle East Hazira LNG Import Terminal: Dahej Hazira Mumbai Start up April 2005 Capacity up to 5 mtpa Expansion to 10 mtpa Asia Pacific Shell Gas & Power

  3. Issues Affecting Market Development • Stunted growth in the anchor market segments • Irrational fuel/feedstock procurement decisions by intermediaries • Regulatory bias in electricity market design – discourages gas based power projects based on commercial gas • Geographic dispersal and offtake size of end-users • Limited pipeline network systems Shell Gas & Power

  4. What needs to change • Subsidy arrangements in power and fertiliser should be direct and transparent – not provide an excuse for avoiding least cost fuel/feedstock procurement • Power projects to be selected for development on least life cycle cost basis rather than least marginal cost • Aggregators needed to develop pipeline networks to connect small offtakers that are geographically dispersed • Accountability regarding indications on incremental gas availability, price and timing Shell Gas & Power

  5. Key next steps • Early appointment of P&NG Regulatory Board • Capacity building within Regulatory body through dedicated staffing • Adequate attention to gas issues and development of pipelines • Early formulation of regulations for gas pipelines to be developed on Contract Carriage principles with non-discriminatory third party access • Development of Pipeline codes, Access codes and Affiliate Code of Conduct • Consultation with industry in the development of regulations and policy will avoid delays in implementation Shell Gas & Power

  6. Hazira – Key Messages • Leverages strengths of two global LNG majors • Hazira commercial architecture currently on “Merchant” model, can also accommodate traditional model • Competitive offering in the context of global market realities, encouraging response from markets • Market reach limited by pipelines • Long term commitment to providing energy to fuel Indian economic growth Shell Gas & Power

  7. Thank You Shell Gas & Power

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