Brisbane

24 June 2014

LNG IMPORT FROM AUSTRALIA :

INFRASTRUCTURE & MARKET IN INDIA

S. Narayanan, Managing Director,

APGDC

Disclaimer

2

The following presentation and views are for information purpose only and are express personal opinion of the speaker. These are not endorsed by GAIL, APGDC or GoAP. Audience may independently verify before taking action and speaker does not held any responsibility for accuracy of information contained therein.

LNG import from Australia :

infrastructure & market in India 3

Background

LNG Infrastructures : Re-gasification

Kakinada FSRU project

LNG Infrastructure : Pipeline, Other

evacuation methods

LNG Supply Potential : Australia to India

4

Background

GDP Growth rate

India Average Growth

rate 2004- 2012 :

7.8 %

Australia : 3%, China

: 10.5 %

India, China Grew

more than World

average of 2.7%

7.9

9.3 9.3 9.8

3.9

8.5

10.3

6.6

4.5

-4

-2

0

2

4

6

8

10

12

14

16

2004 2005 2006 2007 2008 2009 2010 2011 2012

India Australia

China World

Growth of Economy 5

GDP Growth rate

(Data : World Bank)

India

China

World Australia

Indian Economy : Growth & projection

6

India’s GDP grew 4.6% in 2013-14

expected to be 5.5% in 2014-15 *

2014-18 : 5.9 % Annual average GDP Growth (OECD Study )

Long term GDP growth rate pegged to 5 % CAGR

World Energy Usage 7

Share of Natural

gas in the Energy

Basket : 24 %

There is marginal

decline in 2013

Share of Natural

Gas is in increasing

trend in longer term Oil 32.9%

Gas 23.7%

Coal 30.1%

neuclear Energy 4.4%

Hydroelectricity 6.7%

Renewables 2.2%

2013

Data Source : B P Statistical Review 2014

Total : 12730.4 MTOE

8

Oil 30.3%

Gas 9.2%

Coal 52.7%

neuclear Energy 1.3%

Hydroelectricity 4.6%

Renewables

1.9%

2012

India : Role of gas in Energy mix

Oil 29.5%

Gas 7.8%

Coal 54.5%

neuclear Energy 1.3%

Hydroelectricity 5.0%

Renewables

2.0%

2013

Coal 50%

Oil 25%

Gas 20%

Hydel 2%

Nuclear 3%

2025

Current Share of Natural gas in the Energy Basket : 8-9

%

There is marginal decline in 2013

Share projected to reach 20% by 2025

Further increase to converge to global trend, which is

higher, currently at 24%

Data Source 2012& 2013: B P Statistical Review 2014

Data Source 2025: India Hydrocarbon Vision 2025

Total : 2731 mtoe Total : 2952 mtoe

India : NG Vs Total Energy trend 9

320.8 345.1 366.8 390 420.1

446.5 483.8

510.2 534.6 573.3 595

26.6 28.7

32.1 33.5

36.1 37.2

46.7 56.7

55.3

52.9 46.3

0

100

200

300

400

500

600

700

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Natural Gas (in Mtoe)

Total Energy (Mtoe)

Share of Natural gas in the Energy Basket : 8 to 9 %

There is marginal decline in 2013

Share of Natural Gas is expected to increase in longer term as more infrastructure is being developed

Data Source : B P Statistical Review 2014

Natural Gas Consumption 10

Data Source : B P Statistical Review 2014

Share of Natural

gas consumption

as part of total

primary energy :

Slow but steady

growth

Natural Gas

consumption is

sizable and

significant role in

longer term

8.29 8.32 8.75 8.59 8.59

8.33

9.65

11.11

10.34

9.23

7.78

0.00

2.00

4.00

6.00

8.00

10.00

12.00

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Gas as % of Total Energy

India : Natural Gas consumption 11

Peak Consumption : 172.6 MMSCMD

Short term reduction in consumption – 2011-13 due to reduction KG D6 gas decline

2003- 2013 : CAGR : 5.71 %

Long term sustainable trend: Upward, around 5 %

Gas Consumption at same 5% CGR in 2030 : 274 MMSCMD

Power and Fertiliser are major consumers of gas totalling to almost 70%

80.8 87.4

97.8 102.2

109.9 113.2

142.2

172.6 168.2

161.1

140.8

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0

200.0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Consumption (Average MMSCMD)

Data Source : B P Statistical Review 2014

India : Gas Demand Projection 12

Source : PNGRB

Vision 2030

Document

Reasonable

assumptions of

Relative energy

basket prices apply

The above is

Unrestrained,

realistic demand

price sensitive

Realistic

Consumption : 274

MMSCMD vs

demand of 746

MMSCMD

242.66

378.06

516.97

654.55

746.03

0.00

100.00

200.00

300.00

400.00

500.00

600.00

700.00

800.00

2012-13 2016-17 2021-22 2026-27 2029-30

Power Fertilizer

City Gas Industrial

Petchem/Refineries/Internal Coms. Sponge Iron/Steel

Total Realistic Demand Log. (Total Realistic Demand)

Figures in Annual Average

MMSCMD

India Gas Production : Inadequate 13

India’s share of proved global natural gas reserves is 33.7 billion Cubic meter, which is 1 % of world 3.37 trillion cubic meter (Source: B P Statistical Review 2014)

KG – D6: 6 TCF, recoverable reserves (estimations)

80 % of production is from off shore fields

Remaining is from onshore filed, in which 90 % is from Assam, Gujarat, Andhra Pradesh

Coal Bed Methane : Not Significant

4 rounds of bidding completed

33 blocks awarded, out of which 5 blocks are producing 0.23 MCM/day

Proved reserve of Natural Gas

14

Data Source : India Pet & NG statistics 2012-13

29.5 29.2 29.6 29.3 30.1 30.5

39.2

50.8

46.1

40.3

33.7

0

10

20

30

40

50

60

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Production (BCM)

Production in 2013 :33.7 Billion Cu m

equivalent to average of 92.3

MMSCMD

Reserve to production ratio of 40.2, vs-

a-vis world average of 55.1

India : Consumption, Production & Import

15

80.8 87.4 97.8 102.2 109.9 113.2 142.2

172.6 168.2 161.1 140.8

80.8 80.0 81.1 80.3 82.5 83.6

107.4

139.2 126.3 110.4

92.3 0.0 7.4

16.7 21.9 27.4 29.6

34.8

33.4 41.9

50.7

48.5

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Gas Import (Avg. MMSCMD)

Production (Avg. MMSCMD)

Consumption (Average MMSCMD)

Data Source : B P Statistical Review 2014

LNG Import to India 16

0.00

1.80

4.07

5.33

6.67 7.20

8.47 8.13

10.20

12.33 11.80

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Gas Import (MTPA)

Data Source : B P Statistical Review 2014

Gas Import

around 12 MTPA,

equivalent to

average of 48

MMSCMD

Primarily through

Dahej and Hazira

LNG terminals

Entire Import

through LNG, No

Import through

pipelines

LNG Import to India: Projection

17

LNG imports to rise from 47

MMSCMD in 2012-13 to 72

MMSCMD (18MTPA) in 2017-18

at a CAGR of 8-9%

India’s LNG requirements primarily met by

Qatar; however share has reduced from 83% in

2007-08 to the current 76%

Currently, PLL is having a long term supply

contract; 7.5 mtpa with Rasgas, Qatar

Supplies from Gorgon, Australia expected to be

delivered at Kochi terminal by 2015-16

GAIL : Tie-up in USA (HH based) to start in 2016-

17

TAPI Pipeline : Import from Turkmenistan

18

Executed Gas Sales and Purchase Agreement (GSPA) in May, 2012

Landed cost at Pakistan – India border is said to be USD 13/ MMBTU

Approx. 1800 kms long pipeline

India’s share 14 BCM/ year (approx. 38 MMSCMD)

Estimated cost: 7.6 Billion (2008)

SPV yet to be formed

Pipeline is expected to be operational in 2018

LNG Import : Determining factors

19

Decline in Indigenous production of Natural gas from KG – D6

& other blocks

Delay in trans-national pipeline- TAPI

Price of LNG

Fertilizer policy

Power tariff policy and Reforms

Last mile connectivity

Inter pipeline swapping, inter state tax

Beyond 2017, LNG penetration to be defined by

regulatory push 20

Peak hour Policy

Natural gas based plants are best suited for meeting peak power requirements as they can be switched on and off with generation being ramped up as per convenience

Subject to incentives offered by the government, it can promote usage of gas for power generation (as tariffs for peak hour are expected to be higher)

Renewable Energy Policy

Considering the rising energy needs of India and its growing focus on use of clean fuels, there is a significant potential for increased cleaner fuels consumption (solar, renewables, gas)

It will potentially result in structural shift in country’s fuel mix from oil towards cleaner fuels

Urea Pricing and Investment policy

Subsidization of POL products

21

Infrastructure For LNG Re-gasification and gas Distributions

India’s LNG Import Program 22

Currently, Four LNG terminals are in operation

Total Capacity : 20 MMTPA

All land Based, all in West Coast

Utilization of newly built terminals at Dhabol and Kochi are

low

Various terminals planned – both east and west coast (details in

later slides)

East Coast terminals :

Mixed development : Land based and also FSRU

Environmental clearance obtained for two projects

LNG Import Infrastructure : Existing and outlook

23

FSRU based / Land

based

Current 2015-16 2019 -20

PLL Dahej Land Based 10 15 15

Shell , Hazira 3.7 5 7

PLL Kochi 5 5 10

Dhabol 2 5 5

Kakinada FSRU based 3.5 5

Gangavaram Land / FSRU based 3.5 5

Mundra Land based 7.5 7.5

Pipavav Land Based 3.5 3.5

Ennore Land based 5 5

Mangalore Land based 5

Others 5

Total LNG Capacity

(MMTPA)

20.7 53.0 73

Gas Qty. 73.5 185.5 255

Figures in MTPA

LNG Projects in West Coast

24

LNG Terminals planned in West

Coast:

In Operation :

Dahej

Hazira

Dhabol

Kochi

Planned :

Mundra

Pipavav

Mangalore

Dahej

Hazira

Dhabol

Kochi

Mundra

Pipavav

Mangalore

Terminals under

operation

Terminals planned

LNG Projects in East India

25

LNG Terminals

planned in East Coast:

FSRU based :

Kakinada (2 nos.)

Krishnapatanam

Paradip

Digha

Karaikal

Land based terminal:

Gangavaram

Ennore

Kakinada

Gangavaram

Krishnapatanam

Paradip

Digha

Ennore

Karaikal

FSRU (In progress)

Land based LNG terminal

FSRU (Planned)

Gas Distribution Facilities

26

27

Kakinada

FSRU project

Distribution facilities in East Coast

28

Name of

the P/L

From – To Capacit

y

(MMSC

MD)

Curren

t flow

MMSC

MD)

Mallavara

m Bhilwara

pipeline

Kakinada –

Bhilwara

57 Under

Constr

uction

Kakinada

Srikakulam

pipeline

Srikakulam

, further to

Haldia

20 Notifie

d for

biddin

g by

PNGR

B

Ennore

Nellore

Ennore -

Nellore

5 Under

biddin

g

Vijaywada

- Nellore

Viajywada

– Nellore

10-15 Propos

ed

To Bhilwara

To Ankot (Gujarat)

GAIL KG Basin Network

ENPL

Ennore

Krishnapatnam

Gangavaram

Kakinada

Legends:

GAIL KG Network:

EWPL (RGTIL) :

MVPL (under const):

P/l under bidding :

LNG Terminals planned:

Gas Fields :

Offshore Gas fields

(RIL, ONGC, Cairn, GSPL)

29

30

Kakinada FSRU project

A.P. natural gas demand: salient features

Market Study and Business Plan completed by M/s KPMG:

Existing shortfall:13.6 MMSCMD

Additional prospective demand (in existing plants): 12.4 MMSCMD

Due to drastic reduction in domestic gas production, huge Investments made by power plants threatened to become stranded assets

Power is the first customer base in AP:

Affordability of RLNG is a key issue,

Pipeline connectivity required to mitigate the risk of power shortage.

31

Sector

Contract

ed qty. Supply GAP

Fertilizer 3.3 2.6 0.7

Power 14.0 2.8 12.2

CGD 0.10 0.11 -

Ceramics, Glass,

Steel, and Others 0.9 0.2 0.7

Total 18.3 5.7 13.6

Existing Demand (in MMSCMD)

Sector

Require

ment

GAP

Fertilizer (RLNG ) 5.4 5.4

Power 10.0 3.0 *

CGD 2.0 2.0

Others 2.0 2.0

Total 19.4 12.4

Future Demand (in MMSCMD)

FSRU on the East Coast

In case the FSRU is located on the East Coast

in AP, then the delivered price will be lower at

least by 4 US Dollar due to the avoidance of

additional taxes and transportation charges

Therefore, an FSRU terminal on the east coast

can meet the demand shortfall economically

when compared to the RLNG terminals on the

West coast

Further, towards open access of terminal,

power plants can make high sea purchase,

where tax component becomes nil, and no

customs duty, thereby making more viable

13.41

5.47

1.49

0

5

10

15

20

FOB Price &Other

Taxes Transportation Total Cost

$/M

MB

TU

14.00

2.03 0.40

0

2

4

6

8

10

12

14

16

18

FOB Price &Other

Taxes Transportation Total Cost

$/M

MBTU

15.68

20.36

Why FSRU on the East Coast?

LNG un loaded in East coast & delivered in AP

LNG un loaded on the West Coast & delivered in AP

FSRUs in East India : Need and Opportunities

33

To Bhilwara

To Ankot (Gujarat)

GAIL KG Basin Network

ENPL

Ennore

Krishnapatnam

Gangavaram

Kakinada

Legends:

GAIL KG Network:

EWPL (RGTIL) :

MVPL (under const):

P/l under bidding :

LNG Terminals planned:

Gas Fields :

Offshore Gas fields

(RIL, ONGC, Cairn, GSPL)

Opportunities :

Proximity to Australia LNG export projects as compared to west coast

Easy and ready evacuation through well established Pipeline Connectivity:

Kakinada connected to local and as well to various demand centres across the country through transmission and distribution network

Vizag and Ennore : connection plan made

Other ports : can be quickly connected

FSRUs in East India : Challenges

34

Prevailing higher landed price of imported gas, limiting demand

Indian gas market sensitive to gas price - Higher power cost is not getting accepted

Pooling / Mix of Domestic and imported gas : is not favourable due to reduced domestic production of gas

Viable cost for Indian market is around 11 to 12 $ per mmbtu Delivery Ex. Ship basis and possibly around 10 MTPA of LNG is affordable at this price.

0

10

20

30

40

$6-$7 $11-$12 $15-$16 >$18

Ga

s D

em

and

in M

MSC

MD

Price of Gas per mmbtu

Power Sector Demand (A.P.)

FSRU : Solution with Advantage

35

Floating Storage Re-

gasification Unit

(FSRU) is a

technological

innovation

Effective substitute to

land-based Re-

gasification terminals

FSRU : Solution with Advantage 36

Land Based Terminal

FSRU

FSRU : Solution with Advantage 37

Lower Cost of Implementation

(CAPEX)

Only Receipt facilities are to be

developed, Storage & Regas on

board are hired/ chartered

Capex : 250-350 Million USD ,

when compared to 1 bn USD for

an Land based terminal

Reduced time to market

18-24 months, compared to 48-

60 months

Storage

Regas

FSRU : Solution with Advantage 38

Minimal Land Requirement

1-2 Hectors s as compared to 30-40

hecters

Reduced footprint and environmental

impact- ideal for sensitive or restrictive

areas

More possible locations

Flexibility : in terms of Scales – also

expandable and scale-able

Mobility :

Can serve as conventional LNG carriers

during periods of low demand

Can avoid inclement weather

Preliminary Design Basis : Kakinada LNG

Send-out demand and flexibility:

Annual capacity : 3.5 mtpa;

Maximum send out : flow rate shall be 50% above the average

FSRU output:

Pressure: Min 80 bars, Max 120 bars;

Temperature: Min 0°C, Max 20°C.

Grid Tie-in : Pipeline 1

GAIL grid of Section: 12” & 18”, Distance to shore: <1km;

Gas pressure min/max: 50 bar/70 bar;Minim. Temp : : 3°C;

Grid Tie-in : Pipeline 2 (East-West pipeline):

Section: 48”;Distance : 17 km; Pressure min/max: 50 bar/80 bar;

Minimum Gas Temperature: 3°C;

39

Preliminary Design Basis (contd.)

Marine specifications :

Vessel size : Marine facilities will be designed to accommodate LNG

vessels between 120,000 m3 and 215,000 m3.

Mooring and berth shall be designed to accommodate Q max class

vessels at a later stage.

Call duration (including berthing, mooring, cool down, unloading, cast

off) will be 30 hours for a 160,000 m3 LNG carrier (assuming

availability of storage on the FSRU).

Project to be executed through a SPV being finalised shortly

Flaring: zero flaring (including during unloading) will be the guiding

principle under normal operation.

40

Project Layout

FSRU &

LNGC

Break

Water

(1050 m)

Turning

Radius

Channel (to be

widened

/ deepened GAIL

Existing

Pipeline

network

Inter

connecti

on

Subsea

P/L

Jetty and

Berth

Config

Jetty & berth located on

south leeside of break

water. Benefits :

Tranquil sea state

Less investment for Dredging

Scope for further port

developments

41

42

LNG Supply : Australia to India

LNG Supply to India - Long term contracts

43

From Rasgas, Qatar, linked to Dahej Terminal

7.5 MTPA for 25 Years

Price linked to JCC (12.67% )

From Gorgon, Australia, linked to Kochi terminal

1.5 MTPA , for 25 Years

Price linked to JCC (14.5% )

From Sabine Pass Liquefaction terminal :

3.5 MTPA starts from 2017

Import by GAIL, Price linked to Henry Hub

From Cove Point Liquefaction terminal

2.3 MTPA, Import by GAIL, Price linked to Henry Hub

From Gazprom, Russia

2.5 MTPA, import by GAIL (India) Limited

LNG Supply to India

44

Medium and Short term contracts :

Around 2 – 3 MTPA

Marubeni, GDF Suez, Gas Natural Fenosa

Spot Contracts:

1 – 1.5 MTPA

From countries viz. Qatar, Yemen, Nigeria, Oman, Algeria, Trinidad and

Tobago, Norway, Equatorial Guinea, UAE etc.

Major Australian LNG Projects 45

LNG Supply : Australia to India

46

Huge demand of LNG – though price sensitive market

Supply to East Coast of India – shortest navigable distance, especially from Barrow Island, Browse island projects

Kakinada : Excellent connectivity through pipelines to all regions of India

Prices need to converge , especially for long term supplies

Swapping of US Shale gas acquired by other players with Australian gas to reach other markets to increase volume of LNG export from Australia

47

48

Thank you

49