GLOBAL LNG TARDE- CASE STUDY OF INDIA

Objective of study:

§ To analyze the growing need of the natural gas in

world wide

§ To analyze factors constraining the development

of gas market

§ To find the feasible way of transporting gas by

pipeline or LNG in respect to long distance.

§ To study India’s new gas discoveries and its

impact on the economy.
 
LNG :INTRODUCTION

§ The LNG value chain consists several interconnected elements

such as foreign gas field, liquefaction plant, LNG tanker, LNG
import terminal, and interstate pipeline system.

§ The first segment in the LNG value chain is exploration &

production ,then is liquefaction, LNG shipping, regasification,
& storage.
§ The world’s gas markets are concentrated in three main areas:
North America, Europe and Asia.
§ The expected demand growth in Atlantic basin is
likely to make the Middle East world’s leading LNG
producing zone. 2015, LNG production in this Zone
should stand at about 170 billion cubic meters.

§ Consumption of natural gas will increase worldwide

from 100 trillion cubic feet in 2004 to 163 trillion
cubic feet in 2030 according to the IEO 2007
reference.

§ Over the last ten years international LNG tanker

trade has increased by 7.2%/ year on average.

§ LNG tanker will grow rapidly to 196-232 Mt in 2010

and 310-375 Mt in 2020
DEREGULATION OF PIPELINE GAS MARKET

§ Until 1984, in USA and Europe pipeline industry was

completely regulated by the governments.

§ To buy or sell gas, users and producers has to deal with the
pipeline they could not deal directly that was the reason why
gas markets failed to exist.

§ In 1985, in US, pipelines were given the option to become

“open access” means it was deregulated.

§ This change in the pipeline industry finished all the barriers to

the market and the first time in more than fifty years there was
the competition between the producers .
FACTORS AFFECTING DEMAND FOR LNG

§ Need to diversify the fuel mix

§ Imperatives of a cleaner environment along the lines of the

Kyoto Protocol

§ Oil price shocks of 1973/74 and 1979/80

§ Emergence of big new Asia markets: India and China.

§ Higher gas prices on some markets (North America, and

Europe) tend to favors the growth of LNG
EXPORTING COUNTRIES

World LNG trade divided into three regions:

§ 1.Pacific basin - Japan is the major Importer-81.86 Bcm.
§ 2. Atlantic basin – Spain is the major Importer-24.42 Bcm.
§ 3. Middle East Exporters.
(Unit -Billion Cubic Metres)
§ USA
§ Trinidad & Tobago
§ Oman
§ Qatar
§ UAE
§ Algeria
§ Egypt
§ Libya
§ Nigeria
§ Australia
§ Brunei
§ Indonesia
§ Malaysia
IMPORTING COUNTRIES

§ USA
§ Dominican Republic
§ Puerto Rico
§ Mexico
§ Belgium
§ France
§ Greece
§ Italy
§ Portugal
§ Spain
§ Turkey
§ UK
§ China
§ India
§ Japan
§ South Korea
§ Taiwan
§ Pacific Basin LNG demand will account for about 45% of the
world total in 2020.

§ Many new LNG receiving terminal projects had initially being

announced in India and in China.

§ Atlantic Basin could experience faster growth of about

10%/year and account for about 55% of world LNG demand by
2020.

§ World natural gas consumption has increased at an average

annual rate of 2.6% over the past two decades, due to its
economic and environmental advantages .
GLOBAL MARKET DEVELOPMENT
LNG CONTRACTS
§ The LNG Sales and Purchase Agreement commits the parties to supply
and purchase of the LNG and major investments in facilities to produce,
transport, receive and consume the LNG for both sides.

§ Term of Policy
§ Clarification on Quantity to be Delivered Annually and Flexibility to Increase or
Decrease Volumes
§ Price
§ Responsibility of Marine Transportation
§ Assignment
§ Amendment
§ Off-Specifications
§ Arbitration
§ Confidentially and Representation
§ Payment Security
§ Gas Supply Area
Contd……

§ Diversion Rights
§ Invoice Payment
§ Scheduling Procedures
§ Delivery Rate
§ Temperature and Pressure
§ The Heating Value and Main Components of the LNG
§ Measuring and Testing
§ Force Majeure
§ Destination
COUNTERY WISE ANALYSIS : INDIA

§ India’s LNG imports comes from Algeria, Egypt, Nigeria, Oman,

Qatar, United Arab Emirates, Australia, and Malaysia.

§ India started receiving LNG shipments in January 2004 with the start-
up of the Dahej terminal in Gujarat state.

§ India’s second terminal, HaziraLNG a joint venture of Shell and

Total. The facility has a capacity of 2.5 mta (488 Bcf/y), which may
be expanded to 5 mta (975 Bcf/y) in the future.

§ Demand for natural gas is expected to grow three fold over the next
few years. By 2011, the demand for gas is expected to grow from the
current 119 mmscmd to 325 mmscmd
§ LNG is expected to contribute nearly 31 per cent of the gas supplies
in India by 2011 as compared to 21per cent .

§ The growth will come from the expansion of Dahej terminal and
commencement of new capacities at Dabhol and Kochi to the tune of
1.5 MMTPA and 2.5 MMTPA respectively.

§ Fertilizers segment in India would boost LNG supplies.

§ Reliance Industry has made a discovery of seven trillion cubic foot

gas reserves in the KG DW-6/98 block in the Krishna-Godavari basin.

§ It will remove fuel deficit at urea making fertilizer plants &

meets half of the 39 mmsmd gas shortfall in power plant and
also with this discovery of Reliance UK’S 1/3 demand will be
met
Contd…

§ The gas demand in India is expected to grow to over 300

MMSCMD by 2025.

§ This new find that promises to deliver another 40 MMSCMD

gas will help India more or less meet its immediate demand.

§ KG-D6 gas will replace about seven per cent of India's oil
consumption in 2009-10.
CONCLUSION

§ Europe will completely de regulate the pipeline gas market due to which the
gas prices will become cheaper.

§ New LNG terminals are under construction in the Asia-Pacific region which
shows the new big market for the natural gas consumption.

§ North America will emerge as the largest target for LNG imports.

§ Europe will also emerge as very big LNG importer in coming years.

§ The new finds in India opens up lot of opportunities but the market
has been subsidized gas for so long is not yet ready for it.
 
§ KG-D6 gas will replace about seven per cent of India's oil
consumption in 2009-10, rising to 14 per cent in the following
three years.
§ US will become a dominant LNG market in future.

§ Most demand growth will come from Newer LNG importers

such as China and India, with slower demand in Japan and
South Korea.