May 2007 - SIMA

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Pricing of Natural Gas � Under the Administrative Pricing Mechanism (APM) gas produced from nominated fields of ONGC and OIL was priced at Rs.2850 per 1000 SCM uniformly to all customers except in North East, wherein the same was Rs. 1700 per 1000 SCM � With effect from 1.7.2006 the price was revised to Rs.3200 per MCM and calorific value of 10000 Kcal/cubic meter. It was also decided that all APM gas will be supplied to Power and Fertilizer sector Demand and Supply Gap Analysis for the period 2007-08 to 2011-12 i) Sector Wise Gas Demand Projections (2007-2012) consumer’s alongwith specific end users committed under Court orders and small consumers below 50000 SCMD. Other consumers will be supplied gas at market price subject to a ceiling of ex-Dahej R-LNG (regasified LNG) price of US$3.86/MMBTU for 2005- 06. � Gas supplied by the JV/private sector, re-gasified LNG and new gas supplies by ONGC and OIL will be charged as per the market price determined by various agreements applicable in this regard. MMSCMD) SECTOR 2007-08 2008-09 2009-10 2010-11 2011-12 Power 79.70 91.20 102.70 114.20 126.57 Fertilizer 40.82 42.65 52.24 79.36 79.36 City Gas 12.08 12.93 13.83 14.80 15.83 Industrial Petrochemicals / Refineries/Internal 15.00 16.05 17.17 18.38 19.66 Consumption 25.37 27.15 29.05 31.08 33.25 Sponge Iron / Steel 6.00 6.42 6.87 7.35 7.86 Total 178.97 196.39 221.86 265.16 282.55 (ii) Gas supply Projections (MMSCMD) Sources 2007-08 2008-09 2009-10 2010-11 2011-12 ONGC + Oil (A) 57.28 58.42 55.69 54.67 51.08 Pvt./JVs (As per DGH) (B) Projected Domestic 23.26 61.56 60.28 58.42 57.22 Supply (A+B) 80.54 119.98 115.97 113.09 108.30 (iii) LNG Supply Projections (MMPTA) LNG Supply Source 2007-08 2008-09 2009-10 2010-11 2011-12 Dahej 5.00 5.00 7.5 10.00 10.00 Hazira 2.50 2.50 2.50 2.50 2.50 Dabhol 1.20 2.10 5.00 5.00 5.00 Kochi - - - 2.50 5.00 Mangalore - - - - 1.25 Total LNG Supply (MMTPA) 8.70 9.60 15.00 20.00 23.75 Total LNG Supply (MMSCMD) 30.45 33.60 52.50 70.00 83.12 MAY-2007/14
iv) Overall Demand- Supply Gap (MMSCMD) 2007-08 2008-09 2009-10 2010-11 2011-12 SUPPLY Domestic 80.54 119.98 115.97 113.09 108.30 LNG 30.45 33.60 52.50 70.00 83.12 TOTAL: DEMAND 110.99 153.58 168.47 183.09 191.42 Demand 178.97 196.39 221.86 265.16 282.55 GAP 67.98 42.81 53.39 82.07 91.13 � It will be observed that scenario indicated above reflects significant deficit which will have to be met either from increased domestic supplies or LNG import or both. � There is another scenario where there is a possible additional domestic supply for 2009-10 (74 MMSCMD), 2010-11 (84 MMSCMD) and 2011-12 (94 MMSCMD). If such supplies materialize than from 2009-10 onwards there will not be any deficit but there will be little surplus. These additional quantities have been estimated by DGH as 20, 30 and 40 MMSCMD from Reliance fields from 2009-10, 2010- 11 and 2011-12 respectively. 54 MMSCMD has been estimated from GSPC in each of above years. � How much of these additional supplies, which turn the deficit into surplus, will actually fructify is dependent on several factors yet to be firmed up. Conclusion India currently produces 90 MMSCMD of Gas against the demand of over 151 MMSCMD. For many years India continues to be deficit in supply of natural gas as the availability has been limited and therefore Government had adopted the system of allocations and administered price mechanism. With the new developments like import of LNG and new finds of domestic gas in KG basin the availability of natural gas / LNG is expected to go up significantly while at the same time the existing sources of supply from Bombay High etc. which are depleting will affect overall availability. The significant new finds from KG Basin yet to be monetized as the development work at wells continues and pipeline infrastructure to bring the gas on land is taking shape. The supplies from KG Basin are expected from Reliance, ONGC, GSPC and British Gas. Out of these players Reliance is expected to begin supplies sometimes in 2 nd quarter of 2008, and if everything goes well then the quantum of supplies that is expected will be around 40 MMSCMD. Though Reliance have claimed that they can supply upto 80 MMSCMD but the same has not been confirmed by DGH. The certified reserves for Reliance by Gaffiney, Cline and Associates have put recoverable reserves at 11.3 TCF. This would confirm supplies only upto 40 MMSCMD. Future factors which will drive demand and prices would be dependant upon (i) KG Basin supplies (ii) Long term LNG availability. Current estimate indicate potential demand of around 20 MMSCMD for City Gas Distribution (CGD) along the existing pipeline routes. This demand is potentially favorable Vis-Vis alternate fuels. Spot LNG volumes in 2006 are a landmark for Indian market. The regassifiers Petronet and Shell imported significant number of cargo’s to meet the demand from Power, Steel and Fertilizer sectors. The imports could have been more but for the restricted availability of spot cargo’s which were priced from $8 to $11 per MMBTU. It appears that in future also India would need to compete with more attractive markets. The challenge is to bring domestic gas to production and source LNG on long term basis. Gas markets would continue to be driven by existing customers in the medium term. Power and Fertilizer will be major sector consuming gas. LNG and new domestic discoveries will compete for the incremental demand. Gas will continue to be priced at a value “compared to alternate options” till the time there is ‘gas to gas’ competition in the market with significantly large volumes from domestic sources. Competitive claims of other consumers both in public and private sector may lead to some kind of allocation by Government for Power and Fertilizer sector. No clarity at present of additional supplies claimed by Reliance and GSPC. Reserve certification and DGH approval yet to happen. Producers from KG Basin may manage production to keep prices in the vicinity of international price. In view of overall deficit our additional requirements may not be fully met from domestic sources. MAY-2007/15
Page 2 and 3: CHAIRMAN P.R. DHARIWAL VICE-CHAIRMA
Page 4 and 5: Introduction SOLUTIONS FOR INDIAN S
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Page 8 and 9: Figure 5 FASTMET Plant at Nippon St
Page 10 and 11: CDM potential of waste gases from t
Page 12 and 13: Table - II Details of CERs Issued i
Page 14 and 15: in Secondary steel making process.
Page 18 and 19: MONNET - FUELING INDIA TO GROWTH Mr
Page 20 and 21: VISIT OF SIMA DELEGATION TO MUSCAT,
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Page 24 and 25: SPONGE IRON INDUSTRY IN ORISSA Back
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Page 28 and 29: Suresh Thawani becomes the new Mana
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Page 34 and 35: area of the DRI formed should be mi
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May 2007 - SIMA

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