FOCUSED ENERGY REPORT

Monthly Report-December

Energy Desk

December 1, 2012 [FOCUSED ENERGY REPORT]

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Table of Content

A. Energy Prices

B. Integrated Energy Policy – key points

C. Energy Outlook of India & Global - Overview

C1. Current Primary Energy production (in 2012)

C2. Reserves of Energy in India as on 2012

C3 Energy Consumption in India (Mtoe) - as per EIA projection

C4. Energy Infrastructure in India as on 2012

C5. India’s Sector wise NG consumption in 2012

C6. Supply Demand Gap & Business Opportunities as on today

C7 Demand Projection of NG in MMSCMD

C8. NG Gas Transportation & Marketing by GAIL, Nov 2012

C9. NG Supply & Availability Projection

C10. LNG import possibility (MMTPA/MMSCMD)

C11. Supply Demand Gap of NG (MMSCMD)

C12. Per capita Energy Consumption (KWH/Person & Energy Intensity (Kwh/unit of

GDP) - on 2010-11 basis

C13. Key Possible investment areas (as per MOP&NG)

C14. India & Major Countries in World-Key Energy Parameters -2030

C15. Primary Energy Consumption -World with projection

C16. World’s population with the projection

C17. Global LNG demand vs. Potential

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A. Oil & Gas (Energy) Prices in last month (October-November):

OIL ($/bbl.) /Gas ($/mmbtu)

PRICE ON 28th October PRICE ON 28th November CHANGE % CHANGE

Brent crude oil 109.44 109.60 0.16 0.15%

WTI crude oil 85.26 86.73 1.47 1.72%

Henry Hub Natural Gas 3.81 3.80 -0.01 -0.26%

Oil & Gas trend in 28th

October-28th

November 2012:

BRENT crude oil ($/barrel) WTI crude oil ($/barrel) NATURAL GAS ($/mmbtu)

B. Integrated Energy Policy in India – Key points

• Through Planning Commission – Expert Committee ( Dr Kirit S Parikh, Member Planning Commission

adopted in Dec 2008)

• To address :

– Production and Uses

– Consistency in Govt Policy

– Consistency in Different types of Energy

– Energy Security

– Energy Conservation

– Research and Development in energy Sector

– Access, Availability , Affordability, Efficiency , Environment

– Reduction of demand supply gap

• Broad Vision of Energy Policy :

– To reliably meet the demand for energy services of all sectors including the lifeline energy needs of

vulnerable household s , in all parts of the country , with safe & convenient Energy at the least cost in a

technically efficient, economically viable and sustainable manner.

• Representative list of areas are :

– 1. Energy Security

– 2. Enabling Environment for competitive Efficiency

– 3. Reduction of Supply Demand Gap

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– 4.Pricing, Taxation, Incentives & Subsidies

– 5. Reforms and Restructuring 6.New Technologies

– 6. R & D

C. Energy Outlook of India & Global – Overview

Global gas production continues to grow

Global natural gas production grew by 3.1% in 2011. The US (7.7%) recorded the largest volumetric increase

despite lower gas prices and remained the world’s largest producer. Output also grew rapidly in Qatar (25.8%),

Russia (3.1%) and Turkmenistan (40.6%) more than offsetting declines in Libya (-75.6%) and UK (-20.8%). The

EU recorded its largest decline in gas production (-11.4%) due to a combination of mature fields, maintenance

and weak regional consumption. (Source: BP Statistical Review of World Energy 2012)

Though Japan has restarted two of its nuclear reactors the vast majority of the lost power generation is still met

by gas imports. Consequently, greater volumes of LNG will be needed to power what is already a heavily import-

dependent LNG market.

China is focused on understanding its domestic unconventional gas opportunity, from both an input cost and

energy security perspective. As a result further Chinese LNG purchases might be marginal over 2013-14 as the

shale ‘adventure’ builds pace. China might look for deals / projects that have a significant equity proportion linked with LNG offtake.

Booming Asian demand will also be driven by emerging economies such as India and China. The region's geography means international pipelines are not a feasible proposition in many cases, thus further increasing the

need for LNG imports.

Unconventional / shale gas boom continues and begins to internationalise

The shale gas has transformed the energy industry in the US by turning a down-hill market into a thriving self-sufficient industry. Half a decade ago, natural gas production was on a steady decline making the US more reliant

on imported natural gas than ever before. Technological breakthroughs completely changed the game, and now

the US is on track to become an exporter of natural gas. In 2001, 1% of natural gas production came from shale compared to 20% today. As a result prices have plummeted which, in turn, appears to be having a positive effect

on manufacturing specially steel and petrochemicals industries.

The rest of the world is now starting to follow the suit. In Europe, Asia and South America there is a strong push

towards shale gas exploration & production. A recent study on shale gas potential conducted in 32 countries by

EIA estimates that global basins contain approx. 5,760 tcf of shale gas reserves. However, all countries outside

USA are still in the infancy stages and at least years away from material production.

Australia Emerging as next big supplier of LNG

Australia will emerge as the region's largest LNG exporter, becoming a major supplier to traditional

markets like Japan and China, but also possibly to existing exporters like Malaysia and Indonesia. In

next few years, Papua New Guinea (PNG) will also make its debut on the regional LNG market.

East Africa & Eastern Mediterranean region emerging as a next big source of natural gas

With the recent offshore natural gas discoveries East Africa has emerged as one of the hottest exploration plays in the world. The discoveries have been made in offshore areas of Mozambique and Tanzania.

In the past few years, there have been large offshore finds in the Eastern Mediterranean countries of Israel and Cyprus. These discoveries have potential to transform the region as a major gas exporter in the coming years.

These finds is giving rise to a new breed of net exporting countries and is going to reverse the direction of LNG shipments rushing to gain from West / East price arbitrage.

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Natural Gas Demand Trends

Global oil & gas consumption

Global natural gas consumption grew by 2.2% in 2011. Consumption growth was below average in all

regions except North America, where low prices drove robust growth. Outside North America, the

largest volumetric gains in consumption were in China (21.5%), Saudi Arabia (13.2%) and Japan

(11.6%). These increases were partly offset by the largest decline in EU gas consumption (9.9%) driven

by the weak economy, high gas prices, warm weather etc. (Source: BP Statistical Review of World

Energy 2012)

C1. Current Primary Energy production (in 2012):

• Coal + Lignite production : 570 MMTPA

533 MMTPA +38 MMTPA Lignite

52 % primary Energy source.

Import of 70 MMTPA

• Crude &POL : 190 -205 MMTPA

(imported 166 +38 Indigenous)

Diesel 41%, Gasoline 13.7%, FO -11%, Naphtha 9%, Kerosene-5%, ATP-5 %.

POL import-16 MMTPA , Export 60 MMTPA

• Electricity : 109482 MW ( against 178920 MW)

28% of total Primary Energy

80401 MW Thermal ( against installed-112820 MW

13403 MW Hydro ( against 37570 MW)

3000 MW from Nuclear (against 4780 MW)

13039 MW from RES ( against 18450 MW)- small hydro, Wind, Solar

• NG : 156-160 MMSCMD

Domestic + Imported ( 100/110 + 50/60)

In 2010-11 -from 140 MMSCMD (with 11% CAGR)

C2. Reserves of Energy in India as on 2012

• Coal : 286 Billion MT ( 715 MMTPA for 400 yrs)

99% in Jharkhand, Orissa, Chhattisgarh, WB, AP, MP, Maharashtra

• Lignite : 41 Billion MT

80 % in TN

• Crude Oil : 757 Million Tonnes ( 38 MMTPA for 20 years)

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Western offshore 43%

Assam-22%

• NG:1241 BCM ( =68 MMSCMD for 50 Yrs)

Eastern offshore -35%

Western Offshore- 33%

CBM- 8%

• Renewable:89760 MW

Wind : 49132

SHP : 15385

Biomass : 17538

Bagasse : 5000

C3 Energy Consumption in India (Mtoe) - as per EIA projection:

Fuel Type 2008 2015 2020 2025 2030 2035 CAGR

Liquid 151 194 236 294 347 385 3.5

NG 40.3 88.2 105 121 131 136 4.6

Coal 274 312 342 385 436 491 2.2

Nuclear 5 17.6 32,8 42.8 50.4 55.4 10.2

Renewable 60.5 88.2 118 133 151 168 3.9

Total 531 700 834 980 1116 1239 5

C4. Energy Infrastructure in India as on 2012:

• Coal Washers : 130 MMTPA

• Crude processing : 215 MMTPA

125 (Oil Cos +JVs) + 90 (Pvt.)

54 MMTPA by IOCL + rest by HPCL (14.8) +BPCL(21.5) CPCCL(11.5 , MRPL-11.8+NRL-3

)+ 90 MMTPA by Pvt. ,& others

• Crude Pipeline : 6500 KM & 100 MMTPA Capacity

• POL pipeline : 11000 KM & 72 MMTPA Capacity

• NG pipeline : 250 MMCMD with 9500 KM of GAIL

GAIL+RGTIL+GSPC+IOCL+OIL+AGCL etc. totaling about 14500 KM

• LNG Terminal : 13.5 - 16 MMTPA

( Dahej 10-12+ Hazira 2.5-3+ 10 MMTPA ongoing at Dabhol+Kochi)

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• Nuclear Plant : 4780 MW

At Kaiga, Tarapur,Kalapakkam, Kakrapar& Rawatbhata

2200 MW ongoing at Jaitapur,Haripur, Bargi, Kovada, Narora, Kumharia etc.

• Wind Power Generation : 18000 MW

( Gujarat, Maha, TN, Karnatak,MP, Rajas – 8 Potential states

• Power Plant : 206526 MW – capacity

Thermal 130000 MW (64%),

Hydro 37000 MW

RES-32900 MW ( solar+ wind+ Biogas, Wte etc)

Nuclear 4780 MW

C5. India’s Sector wise NG consumption in 2012:

• Energy as fuel : 69%,

• Non Energy as raw material : 31%

Total : 100%

• Power : 46% of Total NG consumption

• Fertiliser : 28% of Total NG Consumption

• LPG & Captive : 11.7% of Total NG consumption

• Total NG consumption : 51.3 BCM ( 140 MMSCMD)

o Energy Sector : 35.72

Power : 27.42

Industrial fuel : 2.32

TE : 0.19

Captive /LPG : 4.54

Domestic & Others: 1.25

o Non Power : 15.71

Fertliser :13.43

Pet Chem : 1.18

Others : 1.1

Total : 51.4 BCM( 140 MMSCMD)

Source: MOP&NG, CSO, DGH

C6. Supply Demand Gap & Business Opportunities as on today.

• India current Gas availability : 58 Billion M3 in 2012 (159 MMSCMD)

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• India Demand in 2020 : 220 Billion M3( 600 MMSCMD) 2020

as per CERA (consultant) report.

• Opportunities :

– NG Sourcing from Outside & Within country

– Direct Marketing /Trading,

– Direct Shipping of LNG

– Pipeline Infrastructure connecting NG/LNG/CBM/Shale Gas

– LNG facilities in India & outside

– FSRU/FSU infrastructure in India

– Marketing Tie Up of NG/LNG

– Asset acquisition outside & NG marketing in Global & Indian Market

– Shale Gas- Production & Marketing

– CBM Production and Marketing

– Technology development & infusion

C7. Demand Projection of NG in MMSCMD

Sector 2012-13 2013-14 2014-15 2015-16 2016-17

Power 135 153 171 189 207

Fertilizer 62 110 113 113 113

Price Sensitive Demand- Sub Total 197 263 284 302 320

City Gas 15 19 24 39 46

Industrial 20 20 22 25 27

Petrochemicals / Refineries / Internal Consumption

54 61 67 72 72

Sponge Iron / Steel 7 8 8 8 8

Price Resistant Demand- Sub Total 96 108 121 144 153

Grand Total Demand 293 371 405 446 473

C8. NG Gas Transportation & Marketing by GAIL, Nov 2012.

GAS RECEIPT (IN MMSCMD) For The Day Yearly Avg.

(1a) APM (HVJ) 22.99 22.87

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(1b) PMT (HVJ) 4.84 5.21

(1c) ONGCL MDP (B-22 CLUSTER & VASAI EAST) (HVJ)

2.75 2.46

(1a+b+c) TOTAL RECEIPT (HVJ) 30.58 30.53

(1d) APM (EX-HAZIRA) 2.19 3.04

(1e) PMT (EX-HAZIRA) 4.33 4.33

(1)( a+b+c+d+e) TOTAL RECEIPT ( HVJ + EX-HAZIRA) 37.10 37.90

(2) APM (Other than HVJ) 18.76 20.22

(3) RLNG from PLL (including GSPL direct connectivity)

34.33 29.16

(4) RAVVA & RSGDP (K G Basin) 1.25 1.37

(5) OIL (Rajasthan) 0.58 0.51

(6) FOCUS ENERGY (Rajasthan) 0.27 0.16

(7) HOEC (Cauvery Basin) 0.49 0.31

(8) C-SERIES (ONGCL MDP) 1.35 1.06

(9) SUWALI FIELD (NORTH TAPTI) 0.52 0.33

(10) SHELL RLNG 0.00 0.26

(11) RIL (HVJ+KG BASIN+MUMBAI) 19.51 21.27

TOTAL GAS RECEIPT 114.16 112.55

GAS SALE INCLUDING I/C (MMSCMD) For The Day Yearly Avg.

RLNG+SPOT RLNG 19.56 17.99

HVJ + EX- HAZIRA (APM) 25.67 25.82

ONGCL MDP 3.33 2.66

HVJ (RIL) (GPU I/C)* 2.16 1.59

PMT* 8.84 9.62

MUMBAI (APM+C SERIES)) 8.40 10.46

K.G. BASIN (APM+RAAVA) 4.49 4.99

CAUVERY BASIN (APM+HOEC) 3.72 3.39

TRIPURA (APM) 1.56 1.45

SOUTH GUJARAT (BHARUCH) 1.59 1.73

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SOUTH GUJARAT (BARODA) 0.92 0.98

RAJSATHAN (RSEB) 0.89 0.71

NORTH GUJARAT (AHMEDABAD) 0.41 0.42

ASSAM 0.72 0.67

TOTAL GAS SALE (GAIL) INCL. I/C 82.26 82.48

C9. NG Supply & Availability Projection in India:

Source (in MMSCMD)

ONGC 49

OIL 6

PMT 17

Other JVs 6

R-LNG (including spot) 36

KG-D6 53

Total 167

12th Five Year NG availability Plan (Figures in MMSCMD)

Year 2012-13 2013-14 2014-15 2015-16 2016-17

Domestic Sources 124 149 170 177 210

Imports-LNG 73 101 101 156 184

Expected Total Availability 197 250 271 333 394

C10 . LNG import possibility ( MMTPA/MMSCMD):

LNG Supply Source 2011-12 2013-14 2015-16

Dahej 10.00 12.5 15.00 Hazira 3.6 3.6 5 Dabhol 1.0 5.00 5.00 Kochi - 5.0 5.0

Mangalore - 1.25 1.25/2.8-5** Total LNG Supply (MMTPA) 14.6 27.35 31.25

Total LNG Supply (MMSCMD) *including

Spot**Expansion case

55 104.39 117.72/156*

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C11. Supply Demand Gap of NG (MMSCMD)

Year 2012-13 2013-14 2014-15 2015-16 2016-17

Demand 293 371 405 446 473

Supply 163.25 189.59 198.72 249.11 305.41

Gap 129.75 181.41 206.28 196.89 167.59

Note:

The supply Demand Gap leads to Business opportunities in Energy & Gas sector with Population, GDP, Life

style change denoted as Per Capita Energy growth (KWH/Person).

C12. Per capita Energy Consumption (KWH/Person & Energy Intensity (Kwh/unit of

GDP) - 2010-11 basis.

Year Energy Consumption

in Billion KWH (1)

Population (2)

In Crores

GDP Rs in Crores

(3) (basis of 1999-

2000)

Per Capita Consumption KWh/ Person

( 1/2*100)

Energy intensity( Kwh required per unit of GDP (1/3/10)

2010-11 5693 118 4877842 4816 0.1167

2009-10 5462 117 4464000 4646 0.1224

Note: India’s Per Capita consumption is very less compared to World average & compared to developed countries leads

to opportunities in energy & Gas sector in India.

C13. Key Possible investment areas (as per MOP&NG):

• Gas Grid connectivity

In order to meet the requirements for power generations and for the production of fertilisers and sponge iron,

etc., Gas grid connectivity has been accessed as one of the key investment area.

• Import of Gas Import of LNG from NEA as well as SEA countries

To meet the growing demand for natural gas in the country, the Government has taken the initiative to import

natural gas from the Middle East. A Memorandum of Understanding was signed with Oman in March 1993.

Another MOU was signed with Iran in July 1993, followed by a second in November 1993. The possibility of

importing 50-75 MMSCMD of gas from Iran is being explored and around 56.6 MMSCMD is being proposed

to be imported from Oman. Th e first of the submarine pipelines from Oman to India is planned by mid-1999.

An MOU is also being signed with Brown and Root to undertake feasibility studies for import of gas from

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Myanmar and other neighbouring countries. Import of LNG from neighbouring countries to meet the deficit

between demand and supply of natural gas is also being explored.

• Natural Gas Hydrates

Natural Gas Hydrates are a combination of gas and water in solid phase at low temperatures. These hydrates are

a potential source of natural gas. Among the locations showing evidence of in-situ hydrates, there are

indications of either probable occurrence in and around India the Indian Ocean region. Studies are being

undertaken in the Indian Ocean region to establish the potential natural gas hydrates. Natural gas hydrates

constitute a promising area where opportunities exist for companies to participate in exploiting this potential

source of energy and, if encouraging results are obtained, it would open up a new opportunity in supplementing

natural gas resources.

• City Gas distribution network

• Technological development & infusion in the area of greater efficiency in the use of natural gas.

• LNGTerminals

Supply of Gas in Western, Central and Northern India is being met largely through the gas available from

Western Offshore. However, no appreciable source of supply is available in Eastern & Southern India where

large demand for gas are also required to be supplied.

Suitable ports for handling LNG, and as piped gas imported from the Middle East and taken to the Southern

States would have an appreciable transmission cost, it is considered that LNG imported at Southern ports will

be competitive even against the piped gas. And, therefore, LNG is a viable fuel for power generation at coastal

locations in Southern States.

Mangalore and Ennore have been identified as suitable ports having demand in the vicinity to justify setting up

of LNG terminals at these locations. It is proposed to set up at each of the above locations LNG terminals of 2.8

MMTPA capacity each initially which may go up to 5 MMTPA.

• The import of LNG does not require an import licence. A number of private sector companies as well as Public

Sector. Undertakings are actively examining the feasibility of importing LNG which is considered to be

competitive for power generation and certain other uses in many parts of the country. International suppliers of

LNG have a wide choice of tying up with technically and financially capable importers in India.

C14. India & Major Countries in World-Key Energy Parameters -2030

Countries India China Canada USA Brazil Japan Russia Total

1 Population

( Million)

1485 1451 42 374 217 119 129 8207

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2 GDP growth(

2012-30Average)

5.5 5.7 2.1 2.5 4.6 0.5 2.6 3.4

3 Primary energy

( MToE)

1116 4483 443 2793 584 597 849 18181

4 Liq fuel ( Million Tonne)

339 (30%)

817 (18%)

115 1066 (38%)

179 229 139 5378

5 NG( Billion M3) 139 (12-

13%)

289 (6-7%)

130 733 (24%)

65 113 475 (61%)

4437

6 Coal (MtoE) 436 (39%)

2684 (60%)

25 590 (21%)

35 101 113 4906

7 Nuclear (BKwh) 187 (2%)

749 (2%)

152 87 (3%)

31 388 366 4546

8 Renewable(MToE) 151 (14%)

496 (11%)

144 285 (10%)

290 58 71 2535

C15. Primary Energy Consumption -World Mtoe

Region History Projection % CAGR

2006 2007 2008 2015 2020 2025 2030 2035 %

USA 2515 2562 2522 2570 2643 2721 2797 2877 0.5

Canada 352 360 360 367 395 413 443 473 1

Japan 587 579 564 559 584 587 597 599 0.2

South Korea 236 247 252 279 292 312 330 350 1.2

Australia/New Zealand 163 166 171 186 196 204 214 224 1

Russia 733 748 771 783 788 814 849 894 0.6

China 1849 1988 2172 3129 3543 4054 4483 4823 3

India 473 504 531 700 834 980 1116 1239 3.2

Brazil 289 304 320 390 436 501 584 677 2.8

Total OECD 6156 6201 6156 6310 6567 6799 7023 7262 0.6

Total Non OECD 5972 6211 6564 8142 9044 10122 11158 12136 2.3

Total World. 12128 12413 12718 14454 15611 16921 18181 19399 1.6

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Primary Energy Consumption -World

C16. Population in the world.

EIA 2011 Projection : Million

Region History Projection

2006 2007 2008 2015 2020 2025 2030 2035

Annual Growth

USA 299 302 305 326 342 358 374 390 0.9

Canada 33 33 33 36 38 40 42 43 1

Japan 128 128 128 126 124 122 119 116 -0.4

South Korea 48 48 48 49 49 49 49 48 0

Australia/New Zealand

25 25 25 27 28 30 31 32 0.8

Russia 143 142 141 138 135 132 129 125 -0.4

China 1314 1321 1328 1385 1419 1441 1451 1450 0.3

India 1148 1165 1181 1294 1367 1431 1485 1528 1

Brazil 188 190 192 203 309 214 217 219 0.5

Total OECD 1193 1201 1209 1257 1287 1314 1338 1358 0.4

Total Non OECD 5385 5454 5522 5999 6321 6613 6869 7095 0.9

Total World. 6578 6655 6731 7256 7608 7927 8207 8453 0.9

0100020003000400050006000

2006

2007

2008

2015

2020

2025

2030

2035

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C17. Global LNG demand vs. Potential:

Note on overall Energy Report:

The focussed energy report of December 2012 confined with very specific energy numbers to find the present

consumption, reserves in India with a bit of Global energy perspective.

0

200

400

600

800

1000

1200

1400

1600

1800

2006 2007 2008 2015 2020 2025 2030 2035

USA

Japan

Southe korea

Australia/New zealand

Russia

China

India

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As GDP growth & population growth contributes maximum to the Energy growth for any country, the same has

been addressed.

As a part of Energy basket, Electricity, LNG has also been touched upon as China is going in a big way apart

from Nuclear, Coal. Liquid fuel in their energy basket.

As usual, Energy report finally takes full consideration of GAIL’s present business portfolio with prospect in new

markets or new products.

The primary & secondary data has been collated from different sources and mentioned in appropriate places

wherever needed and subject to updating with time to time as per development.

Note:

The data and information in the report is sourced from websites and documents available in public

domain and doesn’t purport to be official view of government or any organization. Sincere efforts have

been made to present correct data; however, errors and omissions, if any, are regretted and the same

may please be brought to the notice of Energy Desk for necessary corrective action.