GAS IN INDIA Contents Overview of Energy Scenario E&P sector in India Indian Natural Gas Industry Demand and Supply Impact of price Infrastructure development.

GAS IN INDIA

Contents

Overview of Energy Scenario

E&P sector in India

Indian Natural Gas Industry

Demand and Supply

Impact of price

Infrastructure development

Regulatory issues

Overview of Energy Scenario

Energy mix – India and Global

India

7.8%

30.1%

55.5%

1.4%

5.2%

Natural Gas

Oil

Coal

Nuclear

Hydro

Global

24.3%

37.5%

25.5%

6.5%6.3%

Natural Gas accounts for only 8% of current energy consumption against 24% global consumption

Overview of Energy Scenario

Annual consumption, Barrels per person

Country Population (Million) Per Capita Energy use

U.S 285 60.0

Canada 31 69.0

Australia 20 42.2

Japan 130 28.4

Spain 40 25.8

Mexico 100 10.1

Brazil 175 7.6

China 1300 6.6

India 1050 2.4

Bangladesh 140 0.8

Per capita energy consumption in India is bound to increase many fold due to robust GDP growth

Asymmetric Energy Use

Indian Natural Gas Industry

Proved Gas reserves: India - 30.1 TCF, World- 5501.4 TCF

Proved World Natural Gas reserves as on 1 Jan 2003

31%

15%9%

4%

4%

3%

31%

3%

Russia

Iran

Qatar

S.Arbia

UAE

US

Algeria

Rest

U.S Natural Gas Production, Consumption, and Imports,2025 (TCF)

0

5

10

15

20

25

30

1960 1970 1980 1990 2000 2010 2025

15%

28%

Net importsConsumption

Production

Overview of Energy Scenario

U.S. Natural Gas imports break up till 2025 - (TCF)

-1

0

1

2

3

4

5

6

7

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025

History Projections

Canada

Liquefied Natural Gas

Mexico

Source: Annual Energy Outlook 2005

Overview of Energy Scenario

Overview of Energy Scenario

Country 2001 2010 2015 2020 2025

India 22 65 90 114 143

China 28 54 74 102 142

Japan 79 91 99 108 119

South Korea 20 28 37 43 51

Other Asia 139 153 173 198 230

Total 288 391 473 565 685

(In BCM)Future Natural Gas requirement of Asian countries

Overview of Energy Scenario

Minerals 29%

Coal & Lignite32%

Crude Oil & N Gas 39%

Mining Projects under Implementation in India

SEDIMENTARY BASINS

OF INDIA

CAT. I (PROVEN COMMERCIAL PRODUCTIVITY)

CAT. II (IDENTIFIED PROSPECTIVITY)

CAT. III (PROSPECTIVE BASINS)

CAT. IV (POTENTIALLY PROSPECTIVE)

DEEP WATER AREAS WITHIN EEZ

PRE-CAMBRIAN BASEMENT / TECTONISED

SEDIMENTS

E&P sector in India

SEDIMENTARY AREA

43%

13%

44%

Shallow Offshore0.40 MM.Km2

Onland1.39 MM.Km2

Deep Water1.35 MM.Km2

Total Sedimentary Area 3.14 MM.Km2

52%

27%

21%

Total Area Under License 0.99 MM.Km2.

Shallow Offshore

0.270 MM.Km2

Onland0.213 MM.Km2 Deep Water

0.514 MM.Km2

Distribution Under Exploration

E&P sector in India

OIL & GAS PRODUCTION IN JV AND PRIVATE SECTOR

0

2

4

6

8

10

12

1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05

Oil (MMT)

Gas (BCM)

O+OEG (MMT)

In M

MT

/BC

M

JV/Pvt. Share almost 13% of Oil & 21% Gas of National production

Year

E&P sector in India

OIL & GAS PRODUCTION IN INDIA - 2004

E&P sector in India

EXPECTED Vs ACTUAL INVESTMENTS

886.58

655.62

104.93 61.69

577.15

19.55 69.14

1637.8

736.86

0

500

1000

1500

2000

NELP-I (15) NELP-II (6) NELP-III (10) NELP-IV (6) Total (37)

In M

MU

S$

Committed

Actual

E&P sector in India

A

BAYOF

BENGAL

ARABIAN SEA

OilGas Km

0 400200

KANAKDURGA

PADMAVATI

ANNAPURNA

DHIRUBHAI – 1, 2, 3, 4, 5, 6, 7, 8, 16

BHEEMA, NS

Delhi

Mumbai

Chennai

Kolkata

D-5D-6

RajasthanBasin

CB-OS/2

RJ-ON-90/1

KG-DWN-98/3

KG-DWN-98/2

BAYOF

BENGAL

TOTAL - 34

LAKSHMI PRE-NELP 15

ANNAPURNA NELP 19

I N D I ADHIRUBHAI – 9, 10, 11 & 15

CB-ONN-2000/1

CB-ONN-2000/2

PK-2

SARASWATI

RAAGESHWARI

GR-F

KAMESHWARI

MANGALA, AISHWARIYA

SHAKTI, BHAGYAM,

VIJAYA, VANDANA

LAKSHMI

AMBE

GAURI

PARVATI

CBX-1

E&P sector in IndiaNEW SIGNIFICANT DISCOVERIES

26 sedimentary basins Total area of 3.2mm sq. km

Only 18% moderate-to-well explored

Current proved reserves 5.6bn bbl of oil (R/P ratio: 19.3)

30.1 tcf of gas (R/P ratio: 28.3)

Concerns of limited discoveries in the past, offset by Limited drilling in offshore areas, believed to be more prolific

Reliance gas discovery, estimated up to 7 tcf

Cairn’s discovery in Rajasthan with oil reserves in excess of 1500 MMBOE

1 2003 Proved reserves as per BP Statistical Review, 2004 5

E&P sector in India

To Summarize ..

Indian Natural Gas Industry

Paradigm shift - clean energy and reducing emissions

Primary energy demand in India expected to grow strongly with robust GDP growth coupled with rising per capita income

Infrastructure development

Positive outlook to use gas

Demand for natural gas driven by the power and fertilizer sectors Power and fertilizer account for 37% and 35% of natural gas demand

respectively

Power sector projected to witness high growth to achieve Govt. plans

Natural gas has an important role to play in India’s energy needs

Indian Natural Gas Industry

Increase in share of Gas

2003 2025

7.8%

30.1%

55.5%

1.4%

5.2%

Natural Gas Oil Coal Nuclear Hydro

20.0%

25.0%

50.0%

3.0%

2.0%

Natural Gas accounts for 8% of current energy consumption which is expected to grow to 20% by 2025

Natural Gas allocation to consumers is more than current level of Production

13807

11053

8158

5332

497949794273

2472

0

4000

8000

12000

16000

2001-2002 2006-07 2011-12 2024-25

Demand

Supply

Ever Expanding Market…

Year

Demand and Supply - Natural Gas

(MMSCFD)

Indian Natural Gas Industry

Fertiliser Replacing naphtha/FO Existing gas based

plants Maximum volume tied

up by Fertilizer units

Power Competitive with coal

at certain locations Peaking capacities Excellent response in

use of LNG

Power37%

Fertilizer35%

Steel6%

Others14%

Transport8%

Sectorial consumption of Natural gas in India

Demand and Supply

LNG Terminal Capacity (MMTPA)

Dahej 5

Dahej Exp 5

Kochi 2.5

Shell Hazira 2.5

Dabhol 2.5

Mangalore 5

Kakinada 2.5

Total 25

0

5

10

15

20

25

30

2004 2005 2007 2008 2010

Bridging the gap - Import of LNG

(MMTPA)

Demand and Supply

Bridging the gap - Increase in indigenous production

4.565.17

10.8 10.27 9

25.2

8.87.7

25.4 25.1

3435.6536

1412.2

0

10

20

30

40

2005-06 2006-07 2007-08 2008-09 2009-10

Oil (in MMT) Gas (in BCM) O+OEG (in MMT)

Demand and Supply

Bridging the gap - Cross border natural gas pipelines

Iran-Pakistan-India

Myanmar-Bangladesh-India

Impact of price

Cost built up of Natural gas in U.S

Impact of priceCost built up of Natural gas in U.S

0

1

2

3

4

5

6

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025

1995 2025

History Projections

Source: Annual Energy Outlook 2005

Reference case$4.79

Rapid technology$4.35

Slow technology$5.18

Expected Natural Gas Wellhead Prices in U.S by 2025 ($ per MSCF)

Impact of price

INDIA - APM; 1.85 $/MSCF, JV: 3.1 – 4.2 $/MSCF

Impact of priceWorld wide Natural Gas Prices ($ per MSCF)

Impact of price

Higher price of natural gas may trigger fuel switching by consumers

Infrastructure development

A substantial boost in supplies from production or imports will take time and will require additional infrastructure Establishment of a national Gas Transmission

system Moving gas from newly emerging supply centres to

demand centres Addition of LNG infrastructure Bringing in Gas Distribution and Marketing system

DelhiDelhi

Mumbai

Chennai

An

dam

an- N

icob

ar

A 1 BLOCK, MYANMAR

EXISTING

PROPOSED

National Gas Grid

National Gas Grid GAILKolkata

Product Pipelines in India

PRODUCT PIPELINE

Infrastructure development

Infrastructure development

Types of Underground Natural Gas storage Facilities

Infrastructure development

U.S & Canada Distribution of Storage Facilities and Working Gas Capacity

Infrastructure development

U.S & Canada Projected Storage Capacity Additions and Costs

Regulatory issues

Regulation in the Indian Natural Gas sector is in a state of transition Natural gas industry in India is evolving : Moving from a centralised, Govt

controlled business to a more market responsive, market driven environment

DGH is the effective regulatory body for the upstream hydrocarbon sector in India

Determination of Wellhead price for the purpose of payment of royalty is under discussion

Policy of taking Profit gas in cash or kind by Government is under

consideration Implementation of Open Acreage Licensing policy to intensify the

Exploration in India

Regulatory issues

Transparent regulatory framework is desired to ensure that sectoral targets for growth are met Achieve Government's long-term plans for development of

gas sector, including establishment of National Gas Grid

Promoting investment in the development of gas infrastructure (pipelines, storage facilities)

Promoting competition among entities, ensuring reasonable tariffs and protecting interests of consumers

Promoting optimal utilization of resources invested in the sector and ensuring safe operations

Regulatory issues

Natural Gas Pipeline Policy is in the draft stage which aims to develop pipeline infrastructure and standards for interconnectivity

Common Carriage

Standards for interconnectivity

Capacity for transmission pipelines

Regulation of Tariffs

Petroleum and Natural Gas Regulatory Board Bill 2004 is also in the draft stage

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