GAIL (India) Ltd

A Maharatna Company

Natural Gas Scenario in India & Abroad

© GAIL (India)
04th July2019
Limited
Agenda

A Global Energy & Natural Gas Scenarios

B International LNG Scenario

C Indian Economy and Energy Outlook

04-07-2019 © GAIL (India) Limited 2

Global Energy & Natural Gas Scenarios

© GAIL (India) 04-07-

3
Limited 2018
Sales & Marketing

▪ Sales - is simply, inducing the customers to make purchase of goods or services offered by the
company.
▪ Marketing - is all about ascertaining human needs and satisfying them, by providing the
products they require, or say, it is about meeting needs profitably.

04-07-2019 © GAIL (India) Limited 4

 Global Energy mix has evolved over the years

Source: Shell 04-07-2019 © GAIL (India) Limited 5

 Global gas supply has grown at 2% p.a. since 2010 primarily due to
increased supply from unconventional sources
All figures are in BCM, 1 BCM: 2.74 MMSCMD
2.0% p.a.
3500.0

3000.0

2500.0
BCM

2000.0

1500.0

1000.0

500.0

-
2010 2011 2012 2013 2014 2015 2016 2017

Asia Pacific Africa Middle East CIS Europe South & Central America North America

Source: BP Statistics 04-07-2019 © GAIL (India) Limited 6

 Gas consumption has failed to keep up with supply driven by the
slowdown of European and American economies
All figures are in BCM, 1 BCM: 2.74 MMSCMD
3500

3000

2500

2000
BCM

1500

1000

500

0
2010 2011 2012 2013 2014 2015 2016 2017
Asia Pacific ME & Africa Europe America

Source: BP Statistics 04-07-2019 © GAIL (India) Limited 7

Energy Consumption Trend : World

❑ World economy is expected to almost double over the next 20

years, with growth averaging 3.4% p.a. largely driven by

increases in productivity (i.e. GDP per person)

❑ The world’s population is projected to increase to reach nearly 9

billion people by 2035

❑ Expected growth in the global economy is driven by emerging

economies, with China and India accounting for around half of

the increase

❑ Energy consumption is expected to grow less quickly (1.3% p.a.)

than in the past (2.2% p.a. 1995 to 2015)

Source: BP Energy Outlook 2019

 Global Primary Energy Basket – A Comparison

Nuclear Hydro
Region Oil Natural Gas Coal Renewables TPE (MTOE)
Energy electric
World 34.2% 23.4% 25.4% 4.4% 6.8% 3.6% 13511.2
OECD 39.4% 25.7% 15.9% 7.9% 5.6% 5.4% 5605
Non- OECD 30.5% 21.7% 35.9% 1.9% 7.6% 2.3% 7906.1
Asia Pacific 28.6% 11.5% 48.4% 1.9% 6.5% 3.0% 5743.6
China 19.4% 6.6% 60.4% 1.8% 8.3% 3.4% 3132.2
India 29.5% 6.2% 56.3% 1.1% 4.1% 2.9% 753.7
Bangladesh 22.7% 69.4% 7.0% - 0.6% 0.3% 33
Pakistan 36.1% 43.3% 8.8% 2.2% 8.7% 1.0% 80.9
(Source: BP Statistical World Energy Review, 2018)

▪ India is the 3rd largest energy consumer after China and US, 2nd in Coal and 3rd in Oil.
▪ Natural gas consumption in India is 6.2% (14th largest consumer)
 Region-wise primary energy consumption shows growing
demand from Africa and India
20000 All figures are in MToE
1.05% p.a.
1 MToE: 3.04 MMSCMD 17866
18000 1.2% p.a.
16095
1.7% p.a.
16000
Tons of oil Equv (MToE)

14304
14000
2.6% p.a. 12119
12000
1.4% p.a.
10000 9356
8112
5719
8000 5803
5842
6000 5756 3.9% pa
3.8% pa 1928
4000 5612 6% pa 1300
860
5036 5.2% pa
538 0.45% pa
2000 4.1% pa 1.04% pa 3839 4017
3462
317 2491
196 1011
0 684
1990 2000 2010 2020 2030 2040

China India OECD Other Asia Africa Rest of World

Source: BP energy Outlook 2019

 Global future energy requirement is expected to be meet by Gas
and RE
1 MToE: 3.04 MMSCMD
2017 1.2% p.a. 2040
571, 4%
7% 2748, 16%

4% 4860, 27%
4538, 34%

7%

4%
13,511 MToE 17,866 MToE

3731, 28%

4355 MToE
3625, 20%
4617, 26%
3156, 23%
Oil Gas Coal Nuclear Hydro Renewables
Oil Gas Coal Nuclear Hydro Renewables

Source: BP energy Outlook 2019

 Global gas demand & production (2017-2040) projection shows strong
growth for gas
All figures are in BCM, 1 BCM: 2.74 MMSCMD 6500
1690
5370 BCM
6000
5369 BCM 1699 5500

5000
4500
3670 3680
4000
3500

BCM
3000
2500
2000
1500
1000
500
0
2017 Demand 2040 Additional Demand 2017 Production 2040 Additional Production
-500

2017 US Middle East China 2017 US Middle East Russia China

India Africa Rest of World Other Asia Africa Europe Rest of World

Source: BP energy Outlook 2019 04-07-2019 © GAIL (India) Limited 12

 Sector wise global gas consumption projection shows demand primarily
from industries and power sector
6000 All figures are in BCM 450 All figures are in BCM
1 BCM: 2.74 MMSCMD 5370 1 BCM: 2.74 MMSCMD 400
400
5000
350 325
295
971 300
4000 3670
1700 BCM
250 218
195
3000 784 200
1749
146
150 131
1949
2000 1182 100
530 50
50 -10
1000 2109 42
771
1443 0
US EU Middle Africa China India Other Rest of
543 -50 East Asia World
0
1990 2017 2040 -100 Power Industry Buildings Non-combusted Transport
Power Industry Buildings Non combusted Transport
Break-up of additional 1700 BCM consumption

Source: BP energy Outlook 2019 04-07-2019 © GAIL (India) Limited 13

INTERNATIONAL LNG SCENARIO
Global LNG Trade – A Snapshot

Value Remarks
317 MT Global LNG Trade in 2018
99 MT Traded on a spot or short term basis ~ 31% of total trade
76% Global LNG demand in Asia
393 MTPA Global liquefaction capacity on Feb’19.
Global liquefaction capacity under construction as on March’18.
101.3 MTPA
(Majority of facilities being constructed in U.S)
824 MTPA Global LNG nameplate receiving facility February’19
525 Vessels Global LNG shipping fleet by end of 18
20 Exporting countries
36 Importing countries
1 MMTPA - ~ 3.6 MMSCMD

INDIA - 4th largest importer ; Imports in 2018: 21 MMTPA (7.44% of total trade)
Global LNG Trading is Rising

04-07-2019 © GAIL (India) Limited 16

 GAIL’s LNG Portfolio
Russia-Gazprom

2.85 MMTPA *(with ramp up)

from 2018 onwards till 2040
US-Henry Hub
Cheniere & Dominion : 5.8
MMTPA
2018 onwards till 2038/39
Qatar
4.5 MMTPA from 2004;
Addl. 0.3 MMTPA from
2016 onwards till 2028

Long-Term Import Portfolio

Quantity : ~14 MMTPA (~50 MMSCMD)
Diversified sourcing across geography: Russia, Qatar, Australia, USA
Supplier / Country of Supplies from Contracted Qty. for
Project Supply GAIL(MMTPA)
RasGas Qatar 2004 4.50
RasGas Qatar 2016 0.30 Gorgon
Gorgon Australia Feb, 2017 0.43
0.43 of 1.44 MMTPA 2017-
Sabine Pass USA Mar, 2018 3.50 2034; Addl. 0.4 MMTPA
Cove Point USA Apr, 2018 2.30 from 2028
Gazprom Russia Jun, 2018 2.85*
Asia likely to remain the largest Buyer of LNG & LNG remains the fastest
form to trade Gas

04-07-2019 © GAIL (India) Limited 18

 New Growth Areas from Gas & Govt. Thrust

Smart Cities ▪ NITI Aayog's 3 year agenda suggests extension of CGD to 100 smart cities
▪ NITI Aayog advocates to use gas for PNG and CNG
▪ Gas is ideal solution for assured and quality power with clean environment
▪ Essential to ban petcoke, diesel based power within city limits
Peaking Power
▪ Gas-fired plants - most responsive and flexible; Ideal for peaking power
▪ With growing renewables, gas based power can be positioned to balance grid
▪ Current installed capacity is 25,185 MW with only 22.5% PLF

CGD
▪ CGD has become the fastest growing sector in recent years
▪ Regulations like declaration of LPG Free zones, Public Utility status, Single window clearance
can facilitate CGD sector growth

▪ LNG-run trucks represent a significant improvement over diesel fuel

▪ Building a network of fuelling stations to ensure the supply of LNG is major challenge

Source: NITI Aayog, CEA

Indian Economy and Energy Outlook

© GAIL (India) 01-10-

20
Limited 2019
 India Economic outlook is expected to remain strong in coming years

▪ India is currently the fastest-growing G20 US 19.39

China 12.24
economy growing over 7.3% in 2018 Japan 4.87
Ger ma ny 3.68
▪ Indian economy has become world's Fifth-biggest UK 2.62
Indian GDP was half of
economy (nominal) in 2019 surpassing France India 2.61 France 10 year’s ago
France 2.58

▪ India’s economic growth begins at low level of Bra zil 2.06

Italy 1.93
resources utilization and GDP growth can be GDP 2017 (USD Trillion)
Canad a 1.65

raise by better employment of excess resources 0.00 5.00 10.00 15.00 20.00 25.00

with existing technologies. Per capita consumption ($)

59532
45032
▪ According to a 2019 Standard Chartered report, 38428 44470 39720 38477 31953
8827 9821
Indian economy is expected to become 2nd biggest 1940

overcoming US by 2030 (PPP) US China Japan Germany UK India France Brazil Italy Canada

▪ Investment and exports, supported by the India’s growth has been driven by an increasing
smoother implementation of GST are becoming share of investment and exports, with a large
major growth engines contribution from increased consumption

Source: World Bank 2018/ Industry Report/ Forbes Study 04-07-2019 © GAIL (India) Limited 21
 Indian Energy basket is heavily fossil fuel dependent

World (2017) India (2017)

Fuel type
13,511 MMTOE 754 MMTOE
Oil 34% 29.47%
62 86%
Coal 28% 56.3%
%
Natural Gas 23% 6%

Hydroelectricity 7% 4%

Nuclear Energy 4% 1%
Source: BP Statistical Review
4% of World Energy June 2016, BP Energy Outlook 2018
Renewables 3% BP Statistics 2018 data

Fuel Consumption India’s Global Rank in 2017-18 ▪ 5.6% share of global energy consumption

Coal 2nd ▪ India’s primary energy consumption rose

5.7% CAGR in last 10-years
Oil 3rd
▪ Energy mix dominated by fossil fuels
Hydel / Nuclear / Renewables 7th ▪ 2nd largest consumer of coal after China
Natural Gas 14th ▪ 3rd largest consumer of crude oil

Source: BP Statistical Review 2018 01-10-2019 © GAIL (India) Limited 22

 India’s Primary Energy

800 754
Figures are in MTOE 722
Natural Gas Share in India’s
685
700
638
primary energy mix has gone
596 down from 11% in 2010 to
600
535
563 6.2% in 2017.
524
480
500
424
406
397
400 360
298 324
271 Renewables
278
251 Hydro electric
300
47 Nuclear Energy
44
200 46 41
55 49 46 Coal
46 56
Natural Gas
100 196 217 222
156 163 172 175 181 Oil
151
Total
0
2009 2010 2011 2012 2013 2014 2015 2016 2017

(Source: BP Statistical World energy Review, 2018)

Energy Consumption - Comparison

Nuclear Hydro
Region Oil Natural Gas Coal Renewables
Energy electric

World 34.2% 23.3% 27.6% 4.4% 6.8% 3.6%

Asia Pacific 28.6% 11.5% 48.4% 1.9% 6.5% 3.0%

China 19.4% 6.6% 60.4% 1.8% 8.3% 3.4%

India 29.5% 6.2% 56.2% 1.1% 4.1% 2.9%

(Source: BP Statistical World energy Review, 2018)

Both India & China are in the process of diversifying the primary energy mix and
increasing share of cleaner natural gas & renewables.
 Future Indian primary energy mix expected to change towards cleaner
fuels with gas and renewable playing major roles

2017 1 MToE: 3.04 MMSCMD

4.2% p.a. 2040
4.1% 22, 2.9%
306, 15.9%
1.1%
447, 23.2%
222, 29.5%
2.9%

2.3%

754 MToE 1928 MToE

160, 8.3%
1174 MToE
47, 6.2%
425, 56.3%
916, 47.5%

Oil Gas Coal Nuclear Hydro Renewables Oil Gas Coal Nuclear Hydro Renewables

Source: BP energy Outlook 2019 04-07-2019 © GAIL (India) Limited 25

 Gas share in India’s primary energy mix has fallen from 10% in 2010 to
6.2% in 2017
1 MToE: 3.04 MMSCMD
800 754 12.0%
10.5% 724
10.1% 685
700 9.7% 664
622 10.0%
612
600 569
537
8.0%
500 7.1%
6.6%
6.0% 6.2% 6.2%
MToE

400 6.0%

300
4.0%
200
2.0%
100 54.3 55.9 64
44.4 43.9 41.2 45.1 46.6

0 0.0%
2010 2011 2012 2013 2014 2015 2016 2017

Primary Energy Consumption (Mtoe) Gas Consumption (Mtoe) Share of gas in PE

Source: BP Statistical Review 2018 04-07-2019 © GAIL (India) Limited 26

 India Energy Sector remained one of the key driver of global energy
growth

60% 57.9% 56.2% 56.3% Growth Rate (2018):

Primary energy consumption growth - 4.6% (YoY)
50%
Coal consumption growth - 4.8%, Largest
increment in the world (YoY)
40%
30.1% Electricity generation growth - 5.6% (YoY)
29.5%
30% 28.6%
Renewables power growth - 20%, its largest
increment ever, 5th largest contributor to the
20% global growth in renewables (YoY)
6.0% 6.2%
10% 4.0% 2.9%
6.1%
1.3% 1.1% 4.4% 1.9%
4.1% 2.5%
1.2%
0%
Oil Natural Gas Coal Nuclear Energy Hydro electric Renewables

Energy mix 2015 Energy mix 2016 Energy mix 2017

Source: BP Statistical Review 2018 04-07-2019 © GAIL (India) Limited 27

 Domestic gas production in India is expected to peak around 2024-2027
at ~110 mmscmd
120.00
▪ KG basin is expected to
be a key driver
100.00 for increasing domestic
gas production in the
80.00 medium term
▪ US$ 14 bn is expected to
MMSCMD

60.00 be invested by 2020-21 in

KG basin
40.00 ▪ However, some
uncertainty remains in
20.00 gas production volumes,
particularly from deep
0.00
water blocks in KG basin
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Bombay Offshore RJ Basin Cambay Basin Assam Arakan KG Basin Others

Source: Wood McKenzie/ McKinsey Analysis MAP 04-07-2019 © GAIL (India) Limited 28
 Power sector has been badly effected due to affordability

All figures are in MMSCMD

70.0
63.4
61.6 Domestic LNG
60.0 6.7
7.3

50.0
42.5
MMSCMD

40.0 5.0
31.8 33.0
29.4 30.4
28.0
30.0 7.5
56.7 54.2 2.2 6.8
2.7 7.5

20.0
37.5
27.3 25.3 25.0 25.5
10.0 22.9

0.0
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18

Source: GAIL, PPAC 04-07-2019 © GAIL (India) Limited 29

 Natural Gas consumption pattern – India (2018-19)

Sector-wise Break-up Gas-wise Break-up

Volume in MMSCMD Volume in MMSCMD This

Fertilizer 74.00,
49, 33% 50%
41, 28%
Power
75.00,
CGD 50%
Domestic
33, 22%
26, 17% Others RLNG

Gas consumption during FY (2018-19), ~149 MMSCMD

Power and Fertiliser - Anchor Markets
Source: PPAC
Industrial and City Gas - Growing Markets
Note.: Numbers for FY 2018-19 are provisional. 149 MMSCMD excludes internal gas consumption of domestic gas producing companies.
* Others includes Refinery, Petrochemicals, LPG, IC and Manufacturing etc.
 India - Gas Production vs. Sales
180 60%
162
160 155 50% 51%
144 50%
45% 144
140 134 139
126 128
124 41% 128
38%
120 112 113 40%
104 103
100 94
29% 28% 27% 30% 79
30%
80 74 74 73 71 73
22% 22% 69 68 70
58
60 49 51 20%
42 40
32 36
40 30 29
10%
20

0 0%
2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18

Total Sales Domestic gas Available for sale LNG Import Share of LNG

LNG consumption has increased but price affordability is still a challenge for Indian Gas market
Source: PPAC . Volumes available for sale in domestic market are approx. 80% of gross production
 Gas in India has considerable potential…
Gas potential and actual, 2018,
District-wise latent gas demand
mmscmd 400+
44
Fertilizer
140

Power
80

41
80
33
CGD 23
65 24
22 144

Ranking of districts based Refining

on latent gas demand1
Top 10% districts
Top 10.1 to 35% districts
Industrials
Top 35.1 to 60% districts
Last 40% districts
Potential Actual

SOURCE:
SOURCE: McKinsey
McKinsey analysis
analysis for GAIL, 2018-19
GAIL’s Gas Sales Profile in Domestic Market
All fig. in MMSCMD
90 45%
83 84 84
81 81
79
80 40%
72 74
40%
70 67 38% 35%
64
62
59 34%
60 30%
52 52
49 49
50 27% 25%
26%
23.7% 23.7% Domestic
40 20%
20% 32 32
30 25 15% RLNG
20 19 21 20
20 17 10%
Total

10 5%
% of RLNG in
0 0% total
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 consumption

Decline in Domestic Gas has been off-set through RLNG despite unfavorable price differential
India Gas Demand Projections till 2021-22
All fig. in MMSCMD
194
200 CAGR: 5% 178
165
144 153
130.5 139 Others
150
Steel & Sponge iron
100 CGD Sector
Power
50 Fertilizers

0
2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22
% change over
2017-18 2021-22
17-18
Fertilizers 39.76 46.50 17.0
Power 33.49 34.19 2.1
CGD Sector 23.24 40.43 74.0
Steel & Sponge iron 3.1 6.82 120.0
Others 44.54 65.71 47.5 Projection based on 3 year CGAR of
Total 144.13 193.65 34.4 5% and capacity addition schedule.

Focus of GoI on increasing gas consumption resulting in increasing consumption in

CGD, Manufacturing & Industrial Sectors
 CGD Sector : An Overview

Till 8th Bidding Round (2017)

• 35 Entities, 92 GAs, 23 States
• 42.8 Lakhs DPNG Connections
• 1424 CNG Stations
After 10th Bidding Round
• 27 Lakh vehicles (Mar’19)
• 46 Entities-402
Districts-228 GAs
• 53% India’s Area, 70%
Population
• 50.43 Lakhs DPNG
By 2029 Connections
• 10000 CNG Stations • 36869 C&I
Connections
• 2.4 Cr. CNG Vehicles
• 1730 CNG Stations
• 4.5 Cr. DPNG • 33.47 Lakhs CNG
Connections vehicles
 Natural gas consumption in India has evolved over the years with shift
towards CGD and industries

D: 127 D: 115 D: 95 D: 80 D: 74 D: 63 D: 69 D: 71
L: 35 L: 39 L: 44 L: 41 L: 43 L: 62 L: 70 L: 74

180 All figures are in MMSCMD

162
154
160
139 139 145
140 39 32
131
121 117
120 36 42 45
36
MMSCMD

13 16 30
100 27
16
80 19 20 24
15 17
63 62
60 43 29 30 32
28 33
40

20 39 39 40 43 42 44 42 40

0
FY 2010-11 FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16 FY 2016-17 FY 2017-18

Fertilisers Power CGD Sector Steel & Sponge iron Others

D: Domestic L: LNG

Source: GAIL, PPAC 04-07-2019 © GAIL (India) Limited 36

Opportunities

Share of Natural Gas in Indian energy mix declined from 11% in 2010 to 6.2% in 2017

GoI has targeted increasing the gas share from 6.2% to 15% in the Primary Energy mix

❑ Gas consumption of ~300 MMSCMD is needed to reach 15% of PE mix

Huge investments are being made across the Natural Gas value chain:
❑ Gas Pipelines: Rs. 60,000 cr to 70,000 cr

❑ LNG terminals: ~ Rs. 25,000 cr

❑ Gas based Fertilizer sector : ~ Rs. 30,000 cr

❑ CGDs : Rs. 70,000 cr - 80,000 cr

E&P: Out of total 41,872 MMTOE estimated hydrocarbon reserves 29,796 MMTOE (3/4th) is still
undiscovered (Source: DGH)
Petrochemicals : India’s per capita consumption of plastics is just 11 kg vs. China per capita
consumption of 45 kg.

37
Regulatory push needed to create additional demand for a gas based
economy

Fiscal & ▪ Expeditious implementation of Uniform Tariff along GAIL’s P/L network
Regulatory ▪ Bringing Natural Gas under GST for competitiveness and improve affordability

▪ Rejuvenation of stranded gas power capacity th’gh new domestic gas allocation
Power ▪ Peaking power policy for purchase of gas power by DISCOMS
▪ Factor True Cost of Public Health in pricing Coal based power dispatch

▪ Time bound single window clearance for CGD network laying

CGD ▪ Promote gas based generators for commercial use in CGD GAs
▪ Ban on FO and Petcoke in CGD areas

▪ Incentivize p/l infrastructure developers through ensuring assured returns

Infrastructure
▪ Viability gap funding for connecting high potential areas to National Gas Grid

04-07-2019 © GAIL (India) Limited 38

Gas pipeline infrastructure in India
Pipelines KM Timeline
GAIL existing
11400 Operational
Pipelines
Others existing
5500 Operational
Pipelines
Total Existing
16900 Operational
Pipeline
Under Construction
5681 2021-22
by GAIL & JV
Under Const. -
Indradhanush (NE 1656 2022-23
grid)
Bid out Pipeline
authorized by 7756 Beyond 2022
PNGRB
Envisaged
3270 Beyond 2022
Pipelines
By 2022- 2023 &
Total NGG 35263
beyond

Arterial Grid expected to be in

MAP
place by 2023 & beyond
Note:
Regasification Terminals in India
DAHEJ I & II
10 + 5 m m tpa
2.5 (under Exp)

Existing LNG Terminal

(35 MMTPA)
MUNDRA
5 MMTPA

Chhara Kolkata Under Construction

5 MMTPA (5 MMTPA)
2.5 MMTPA
Jafrabad(FSRU)
DHAMRA
5 MMTPA Planned/Upcoming
5 MMTPA LNG Terminal (30 MMTPA)
HAZIRA
KAKINADA
5 MMTPA
3-5 MMTPA
DABHOL
1.4 + 3.6 MMTPA Krishnapatnam
2.5 MMTPA
JAIGARH
3-4 MMTPA
ENNORE
KOCHI 5 MMTPA
5 MMTPA