Indian Natural Gas Market, Global LNG Trade Dynamics and Economic viability of R-LNG in India

Feb, 2014   |   212  Pages   |   Indian Petro Group   |   Format : PDF

The share of LNG in total natural gas consumption in India reached 25.5% in FY12 and increased to 30% in FY13. The fall in domestic gas production in recent years has forced many gas consumers to evaluate the viability of using R-LNG to bridge the gap. The governments decision to increase the price of domestic natural gas from April 2014 has further complicated things for natural gas consumers. Domestic gas prices are expected to double to around $8.5/MMBTU from $4.2/MMBTU currently. The domestic gas production is not expected to increase substantially over the next 3-4 years.

Keeping in view the scarcity of domestic gas, Indian Petro Group has assessed the competitiveness of imported LNG with various liquid fuels based on the energy content and price. Based on the price of alternative fuels, the viability of using imported natural gas for various industries has been analyzed.

Gas based power stations around the country are operating at low PLFs due to unavailability of gas and are in danger of defaulting on their debts. Gas based power plants will find it extremely difficult to compete with coal power plants in the future. The recent debacle in the power sector will reduce the pace of investment in gas power plants. With coal prices in the range of $2-3/MMBTU, domestic gas priced at $8.5/MMBTU and imported gas price of $16-20/MMBTU, the cost of generation from gas power plants will be significantly higher than that of coal power plants.

The fertilizer sector will also have to adapt to the new pricing paradigm. Naphtha prices are currently trading around $26-27/MMBTU in India but the subsidies doled out by the government makes it a viable option when compared to Natural gas. Natural gas becomes uneconomical for the fertilizer sector at import prices of about $19-20/MMBTU. Under these circumstances, fertilizer producers may find it cheaper to set up plants in the US and Canada to take advantage of the low gas prices prevailing in North America and then import the finished products into India.

Sectors such as Steel, Refineries and CGD had to increase dependence on imported LNG in FY 2013 as they are assigned a lower priority in gas allocation as per the governments gas utilization policy. The CGD sector used imported LNG to fulfill more than half of its gas requirements in FY12 and FY13. The share of imported LNG in the refineries and steel sectors was around 65-75% in FY12 and increased to around 75-80% in FY13. At high LNG prices of around $20/MMBTU, refineries may find it more economical to replace natural gas with Furnace Oil to reduce costs.

Globally, LNG trade has been increasing at a fast pace. The number of countries importing LNG has been on the rise over the last decade. USA and Australia are expected to become major exporters in the near future and offer the best bet for sourcing long-term gas post-2015. The price of LNG in Asia has been very high compared to the prices prevailing at global trading hubs in North America and Europe. The Natural gas market is still largely fragmented into regional markets. India and China are expected to become large importers in the future and will strive for a larger share in the global LNG market. The price of LNG in Asia will continue to be highly volatile in the future as observed in the last two years.

Gas consumers in India need to evaluate all available options to adopt strategies to remain profitable, given the low availability of domestic gas and high prices of imported LNG.

Chapter 1 Executive Summary

Chapter 2 Overview of Global LNG Trade
Introduction
Global LNG Trade
Spot and Short Term LNG Trade
LNG Trade in 2002
LNG Trade in 2007
LNG Trade in 2012
Worldwide Natural Gas Reserves
Major LNG exporters
Qatar
Malaysia
Australia
Indonesia
Nigeria
Algeria
Trinidad & Tobago
Russia
Oman
Brunei
UAE
Other LNG Exporters
Major LNG importers
Japan
South Korea
Spain
China
India
Taiwan
UK
France
USA
Other Importers of LNG
LNG trade prices

Chapter 3 Global LNG Infrastructure
Liquefaction Plants
Regasification Plants
LNG Shipping Infrastructure

Chapter 4 Indian Natural Gas Market
Natural gas Demand
Major Consumers of Gas and their share in gas basket: The matrix is changing constantly
Sector-wise Demand Trends over last 10 years
Power Sector Demand (2003-2013)
Fertilizer Sector Demand (2003-2013)
Other Sectors Demand (2003-2013)
Demand Forecasts sector-wise (2013-2022)
Power Sector Demand (2012-2022)
Fertilizer Sector Demand (2012-2022)
CGD Sector Demand (2012-22)
Overall Natural Gas Demand (2012-2022)
Natural Gas Supply
Domestic Supply
Major Gas Suppliers: Have they delivered on their promises?
Gas basins in India
Indian Gas Supply Trends (2001-13)
Indian Gas Supply Projections (2013-17)
Gas supply from ONGC and OIL
The Shale Gas Scenario
Imported Supply

Chapter 5 Overview of Indian LNG Imports
Ten years LNG supply trend
Major Sources of Indian LNG Imports
Long term LNG tie-ups by Indian companies
Imported LNG pricing
Pricing formula for RasGas Qatar contract
Pricing formula for Gorgon Gas, Australia contract
GAILs LNG Imports

Chapter 6 LNG as a replacement for liquid fuels
LNG Prices
Naphtha Prices
Diesel Prices
Furnace Oil Prices
LSHS Prices
Price Comparison of LNG and other fuels on the basis of Energy Content 124

Chapter 7 LNG affordability by Sector
Sector-wise consumption of R-LNG in FY 2012 and FY 2013
State-wise distribution of APM, Non-APM, KG-D6 and RLNG supply FY12
R-LNG Use in the Power Sector
R-LNG use in the Fertilizer Sector
R-LNG use in Refineries
R-LNG use in Petrochemicals
R-LNG use in Sponge Iron and Steel Production

List of Table
Table 2.1: Global Natural Gas Production and Trade Pipeline and LNG (2002-12)
Table 2.2: Worldwide LNG Trade (BCM, 2001-2012)
Table 2.3: Country-wise LNG Exports in 2002 (BCM)
Table 2.4: Country-wise LNG imports in 2002 (BCM)
Table 2.5: Country-wise LNG Exports in 2007 (BCM)
Table 2.6: Country-wise LNG Imports in 2007 (BCM)
Table 2.7: Country-wise LNG Exports in 2012 (BCM)
Table 2.8: Country-wise LNG Imports in 2012 (BCM)
Table 2.9: Country-wise Global Natural Gas Proven Reserves and Share (BP statistics)
Table 2.10: Country-wise Global Natural Gas Proven Reserves and Share (CIA World Fact Book)
Table 2.11: Qatar Natural Gas Production, Consumption, Pipeline and LNG Exports (BCM, 2002-2012)
Table 2.12: Malaysia Natural Gas Production, Consumption, Pipeline and LNG Exports (BCM, 2002-2012)
Table 2.13: Australia Natural Gas Production, Consumption, Pipeline and LNG Exports (BCM, 2002-2012)
Table 2.14: Australias Gas Liquefaction Projects
Table 2.15: Indonesia Natural Gas Production, Consumption, Pipeline and LNG Exports (BCM, 2002-2012)
Table 2.16: Nigeria Natural Gas Production, Consumption, Pipeline and LNG Exports (BCM, 2002-2012)
Table 2.17: Algeria Natural Gas Production, Consumption, Pipeline and LNG Exports (BCM, 2002-2012)
Table 2.18: Trinidad and Tobago Natural Gas Production, Consumption, Pipeline and LNG Exports (BCM, 2002-2012)
Table 2.19: Russia Natural Gas Production, Consumption, Pipeline and LNG Exports (BCM, 2002-2012)
Table 2.20: Oman Natural Gas Production, Consumption, Pipeline and LNG Exports (BCM, 2002-2012)
Table 2.21: Brunei Natural Gas Production, Consumption, Pipeline and LNG Exports (BCM, 2002-2012)
Table 2.22: UAE Natural Gas Production, Consumption, Pipeline and LNG Exports (BCM, 2002-2012)
Table 2.23: Japan Natural Gas Consumption and LNG Imports (BCM, 2002-12) Table 2.24: South Korea Natural Gas Consumption and LNG Imports (BCM, 2002-12)
Table 2.25: Spain Natural Gas Consumption, Pipeline and LNG Imports (BCM, 2002-12) 
Table 2.26: China Natural Gas Production, Consumption, Pipeline and LNG Imports (BCM, 2002-12)
Table 2.27: India Natural Gas Production, Consumption, Pipeline and LNG Imports (BCM, 2002-12)
Table 2.28: Taiwan Natural Gas Consumption and LNG Imports (BCM, 2002-12)
Table 2.29: UK Natural Gas Production, Consumption, Pipeline and LNG Imports (BCM, 2002-12)
Table 2.30: France Natural Gas Production, Consumption, Pipeline and LNG Imports (BCM, 2002-12)
Table 2.31: USA Natural Gas Production, Consumption, Pipeline and LNG Imports (BCM, 2002-12)
Table 2.32: Price of LNG and Natural Gas at Trading Hubs US, UK, Canada, Germany and Japan ($/MMBTU, 1995-2012)
Table 3.1: Country-wise Liquefaction Capacity and Utilization (MTPA, 2012)
Table 3.2: Country-wise Regasification Capacity and Utilization (MTPA)
Table 4.1: Installed Generation capacity in India by source (MW, 2002-2013)
Table 4.2: Sector-wise consumption of Natural Gas in India (MMSCMD, 2004-2013)
Table 4.3: Installed gas based capacity, consumption, PLF and gas demand (2004-2013)
Table 4.4: Urea Production in India (Million Metric Tons, 2002-2013)
Table 4.5: Urea capacity addition pipeline in India
Table 4.6: Natural gas consumption by Refineries, Industries, CGD and Petrochemicals (2004-13)
Table 4.7: Share in total Natural gas consumption - Refineries, CGD and Petrochemicals (2004-13)
Table 4.8: Sector-wise demand projections for natural gas 12th and 13th Plan Planning Commission
Table 4.9: Power sector natural gas demand forecasts (MMSCMD, 2012-22)
Table 4.10: Fertilizer sector natural gas demand forecasts (MMSCMD, 2012-22)
Table 4.11: CGD sector natural gas demand forecasts (MMSCMD, 2012-22)
Table 4.12: Overall demand forecasts for natural gas Moderate Growth Scenario (MMSCMD, 2012-22)
Table 4.13: Overall demand forecasts for natural gas Low Growth Scenario (MMSCMD, 2012-22)
Table 4.14: Demand Snapshot 2017-18 (MMSCMD)
Table 4.15: Demand Snapshot 2021-22 (MMSCMD)
Table 4.16: Source-wise, Company-wise gas output during 2012-13
Table 4.17: State-wise, basin-wise gas reserves in India (2012-13)
Table 4.18: Company-wise original and revised gas availability projection (BCM)
Table 4.19: Scenario analysis of gas dynamics for 13th Five year plan period (BCM, 2017-22)
Table 4.20: Gas availability projections by ONGC and OIL (BCM, 2013-21)
Table 4.21: Year-wise LNG imports to India (2003-04 2012-13)
Table 5.1: Details of LNG projects approved in 1997
Table 5.2: Year-wise LNG imports to India (2003-13)
Table 5.3: Planned LNG terminals in India
Table 5.4: Projected LNG capacity in India (2013-22)
Table 5.5: Year-wise, company-wise LNG imports (2008-09 2011-12)
Table 5.6: LNG term contracts executed by Indian gas importers
Table 6.1: Comparison of fuels based on price and energy content - 17th September 2013, Mumbai
Table 6.2: Comparison of fuels based on price and energy content 19th September 2013, BPCL
Table 7.1: Sector-wise gas usage of domestic gas and R-LNG in FY 2011-12 (MMSCMD)
Table 7.2: Sector wise usage of domestic gas and R-LNG during April 2012- Jan 2013 (MMSCMD)
Table 7.3: Sector-wise usage of domestic gas and R-LNG during FY 2013 (MMSCMD)
Table 7.4: State-wise distribution of APM, Non-APM, KG-D6 and RLNG supply (MMSCMD, FY 2011-12)
Table 7.5: Cost of Power Generation based on domestic, imported and captive coal consumption
Table 7.6: Price of Coal in India based on energy content ($/MMBTU)
Table 7.7: Plant-Wise Annual Installed Capacity and Production of Urea During (TMT, 2004-05 To 2009-10 )
Table 7.8: List of Refineries in India
Table 7.9: List of Major Petrochemical companies in India
Table 7.10: Sponge Iron Manufacturing in India
Table 7.11: List of Sponge Iron Producers

List of Figure
Figure 2.1: Global Natural Gas Trade via Pipeline and LNG (BCM, 2001-12)
Figure 2.2: Global LNG Trade and number of countries importing/exporting LNG (MTPA, 1990-2012)
Figure 2.3: Spot and Short Term LNG Trade and percentage of total LNG trade
Figure 2.4: Country-wise share of global LNG exports in 2002
Figure 2.5: Country-wise share of global LNG imports in 2002
Figure 2.6: Country-wise share of global LNG exports in 2007
Figure 2.7: Country-wise share of global LNG imports in 2007
Figure 2.8: Country-wise share of global LNG exports in 2012
Figure 2.9: Country-wise share of global LNG imports in 2012
Figure 2.10: Country-wise share of global natural gas proven reserves (BP Statistics)
Figure 2.11: Country-wise share of global natural gas proven reserves (CIA World Fact Book)
Figure 2.12: Qatar Natural Gas Production and Consumption (BCM, 2002-12)
Figure 2.13: Qatar Natural Gas pipeline and LNG exports (BCM, 2002-12)
Figure 2.14: Malaysia Natural Gas Production and Consumption (BCM, 2002-12)
Figure 2.15: Malaysia Natural Gas pipeline and LNG exports (BCM, 2002-12)
Figure 2.16: Australia Natural Gas Production and Consumption (BCM, 2002-12)
Figure 2.17: Australia Natural Gas pipeline and LNG exports (BCM, 2002-12)
Figure 2.18: Indonesia Natural Gas Production and Consumption (BCM, 2002-12)
Figure 2.19: Indonesia Natural Gas pipeline and LNG exports (BCM, 2002-12)
Figure 2.20: Nigeria Natural Gas Production and Consumption (BCM, 2002-12)
Figure 2.21: Nigeria Natural Gas pipeline and LNG exports (BCM, 2002-12)
Figure 2.22: Algeria Natural Gas Production and Consumption (BCM, 2002-12)
Figure 2.23: Algeria Natural Gas pipeline and LNG exports (BCM, 2002-12)
Figure 2.24: Trinidad & Tobago Natural Gas Production and Consumption (BCM, 2002-12)
Figure 2.25: Trinidad & Tobago Natural Gas pipeline and LNG exports (BCM, 2002-12)
Figure 2.26: Russia Natural Gas Production and Consumption (BCM, 2002-12)
Figure 2.27: Russia Natural Gas pipeline and LNG exports (BCM, 2002-12)
Figure 2.28: Oman Natural Gas Production and Consumption (BCM, 2002-12)
Figure 2.29: Oman Natural Gas pipeline and LNG exports (BCM, 2002-12)
Figure 2.30: Brunei Natural Gas Production and Consumption (BCM, 2002-12)
Figure 2.31: Brunei Natural Gas pipeline and LNG exports (BCM, 2002-12)
Figure 2.32: UAE Natural Gas Production and Consumption (BCM, 2002-12)
Figure 2.33: UAE Natural Gas pipeline and LNG exports (BCM, 2002-12)
Figure 2.34: Japan Natural Gas Consumption (BCM, 2002-12)
Figure 2.35: Japan LNG Imports (BCM, 2002-12)
Figure 2.36: South Korea Natural Gas Consumption (BCM, 2002-12)
Figure 2.37: South Korea LNG Imports (BCM, 2002-12)
Figure 2.38: Spain Natural Gas Consumption (BCM, 2002-12)
Figure 2.39: Spain Pipeline, LNG and total Natural Gas Imports (BCM, 2002-12)
Figure 2.40: China Natural Gas Production and Consumption (BCM, 2002-12)
Figure 2.41: China Pipeline, LNG and total Natural Gas Imports (BCM, 2002-12)
Figure 2.42: India Natural Gas Production and Consumption (BCM, 2002-12)
Figure 2.43: India LNG Imports (BCM, 2002-12)
Figure 2.44: Taiwan Natural Gas Consumption (BCM, 2002-12)
Figure 2.45: Taiwan LNG Imports (BCM, 2002-12)
Figure 2.46: UK Natural Gas Production and Consumption (BCM, 2002-12)
Figure 2.47: UK Pipeline, LNG and total Natural Gas Imports (BCM, 2002-12)
Figure 2.48: France Natural Gas Consumption (BCM, 2002-12)
Figure 2.49: France Pipeline, LNG and total Natural Gas Imports (BCM, 2002-12)
Figure 2.50: USA Natural Gas Consumption (BCM, 2002-12)
Figure 2.51: USA Pipeline, LNG and total Natural Gas Imports (BCM, 2002-12)
Figure 2.52: Natural Gas Prices US, UK, Japan, Canada and Germany (USD/MMBTU, 1995-2012)
Figure 2.53: Natural Gas Spot Prices US, UK and Japan (USD/MMBTU, 2007-2012)
Figure 3.1: Global Liquefaction Capacity (MTPA, 1990-2017)
Figure 3.2: Country-wise share of global liquefaction capacity
Figure 3.3: Liquefaction capacity by Country 2012 and 2017 forecast
Figure 3.4: Global Regasification Capacity, Utilization and Forecast (MTPA, 2000-2017)
Figure 3.5: Country-wise share of global regasification capacity
Figure 3.6: Receiving Terminal Capacity by Country 2012 and 2017 Forecast
Figure 3.7: Global LNG Fleet by Year of Delivery
Figure 3.8: Global LNG Fleet by Vessel Capacity, 2012
Figure 3.9: Estimated LNG Charter Rates and New Build Orders (2010-13)
Figure 3.10: LNG Fleet Size by Company and New Build Orders
Figure 4.1: Sector-wise consumption of Natural Gas in India (MMSCMD, 2004-2013)
Figure 4.2: Percentage share of each sector in total Natural Gas Consumption in India (2004-2013)
Figure 4.3: Power plants- actual consumption of gas and demand for PLF of 70% and 90% (2004-2013)
Figure 4.4: Aggregate country-wide PLF of gas power plants (2004-2013)
Figure 4.5: Natural gas consumption by Fertilizer sector (MMSCMD, 2004-13)
Figure 4.6: Natural gas consumption by Refineries, Industries, CGD and Petrochemicals (2004-13)
Figure 4.7: Percentage Share in Natural gas consumption - Refineries, CGD and petrochemicals (2004-13)
Figure 4.8: Source-wise domestic gas output during the 11th five year plan
Figure 4.9: Year-wise gas production in India (2001-02 2012-13)
Figure 6.1: Natural Gas Prices US, UK, Japan, Canada and Germany (USD/MMBTU, 1995-2012)
Figure 6.2: Natural Gas Spot Prices US, UK and Japan (USD/MMBTU, 2007-2012)
Figure 6.3: US Naphtha price vis--vis Crude Oil Price (2006-2011)
Figure 6.4: Brent Crude and Naphtha price trends (April 2011 April 2013)
Figure 6.5: Delhi Diesel Price Chart (Rs/Litre, 2002-2013)
Figure 6.6: Mumbai Diesel Price Chart (Rs/Litre, 2002-2013)
Figure 6.7: Global Fuel Oil Prices NYMEX, Singapore, US Gulf Coast and Rotterdam (Jul-07 to Apr-09)
Figure 6.8: FO 180 Singapore FOB price (Jan-Mar 2013)
Figure 7.1: Comparison of overall cost of power generation under different fuel mix scenarios
Figure 7.2: Cost of gas based power generation based on cost of gas

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