Value through partnerships: LNG market in Asia
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The document discusses the LNG market outlook in Asia. It notes that Asia's LNG demand is growing rapidly and will almost double over the next decade, however Asia pays the highest prices for LNG. It identifies challenges for Asia including a lack of gas infrastructure and competition, prices still being linked to oil, and the absence of trading hubs. The document advocates for partnerships between LNG buyers and sellers in Asia to help unlock the potential of the industry through initiatives like joint asset acquisitions, swapping volumes, and knowledge sharing. It promotes GAIL as a preferred partner for investments in India given its experience and capabilities in the LNG supply chain.
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Value through partnerships: LNG market in Asia
- 1. Value through Partnerships: LNG Market in Asia World LNG Summit, Paris November 19, 2013
- 2. CONTENTS • LNG Outlook • Challenges For Asia • India’s Gas Sector – Snapshot • Value through Partnerships
- 3. LNG Outlook
- 4. Distribution of Proved Gas Reserves 100% 8% 8% 8% 92% 92% 92% 1992 2002 2012 Asia Pacific 80% 60% Rest of the World 40% 20% 0% BP Statistical Review 2013
- 5. Regional Imbalances in Asia-Pacific : Imports Rising Source: Exxon Mobil – An Outlook for Energy : A view to 2040
- 6. World LNG Market (2011-12) LNG Consumption by Region, 2011-2012 180 MMTPA 140 100 60 20 -20 2011 2012 Europe Asia-Pacific 65.7 51.1 153 166.6 MiddleEast 3.6 3.4 North America 11.8 9.4 South America 7.3 10.7 Source: IGU LNG Report
- 7. Asian LNG Demand Remains Robust Demand for LNG almost doubling over the next decade.
- 8. Demand and Prices have No Correlation Asia pays the highest price for gas Accounts for 71% of LNG demand New LNG Market reality: Rise of new suppliers and consumers India, China, Korea, Japan tied-up LNG indexed to HH from USA Market needs new price models to sustain growth of LNG industry
- 10. Asian Market – as it is today There are three major regional markets Their own specificities and own ways of pricing gas with very large variations in price Gas has 11% share in the energy mix vs 24% global average Gas consumption is largely thru LNG import Though Asia accounted for 71% of global LNG consumption in 2012, it still continues to pay the highest price India and China represented a combined 12% market share in 2012 The growing appetite for LNG in India and China resulted in 7.7% & 12.2% growth in 2012 (YoY basis)
- 11. Challenges for Asian Market a) Lack of adequate infrastructure particularly crossborder gas pipelines b) No ‘gas to gas’ competition c) LNG prices are still linked to oil prices d) Despite large volume of gas consumption, Trading Hub and regional Index are missing in Asia-Pacific region e) Absence of trading hubs is keeping Asian gas prices very high vis-à-vis North America and Europe • Regional Cooperation among Asian Buyers is of prime importance to face the challenges
- 12. India’s Gas Sector - Snapshot 1
- 13. India’s Energy Mix – Gas Rising 300 bcm 54 bcm 1% 5% 26 bcm 30% 2012 1% 6% 53% 9% 36% 2000 49% 8% Natural gas ~10% of India’s energy mix Expected to reach 20% by 2030
- 14. LNG Imports % Share of LNG in Total Supply 60% 40% 20% 0%
- 15. India’s Challenges and Strategies • National Gas Grid- Shaping up rapidly, to be ready by 2017 (PAN Indian presence with pipeline network of 31,000km) • End-use reforms to address price sensitivity and affordability • Building enhanced LNG import capacity (20 MMTPA in 2013 to 35 MMTPA by 2017) • Contract new LNG at competitive prices and conditions • Develop a portfolio of equity assets in LNG and upstream in USA/Africa etc. • Develop capacity and capability to create and maintain infrastructure • Attract required investments
- 16. Gas Infrastructure TAPI P/L From Pakistan NANGAL BHATINDA Hisar DELHI Jhajjarr BAREILLY GURGAUN MATHANIA JAISALMER AURAIYA AGRA LUCKNOW DISPUR JAGDISHPUR BARMER KANPUR PATNA GWALIOR PHOOLPUR KOTA UJJAIN RAJKOT DAHEJ I & II 10 mmtpa JHANSI VARANASI VIJAYPUR GAYA AGARTALA BOKARO BHOPAL JABALPUR AHMEDABAD KOLKATA BHILAI BHARUCH CUTTACK BARODA DAMRA SURAT MUMBAI HAZIRA 3.6 mmtpa HaldiaJagdhispur P/L BHUBANESHWAR PUNE KRISHNAPATNAM RAJAMUNDRY DABHOL 5 mmtpa SOLAPUR KOLHAPUR KAKINADA HYDERABAD VIJAYAWADA GOA Surat Paradip P/L NELLORE BANGALORE CHENNAI TIRUCHCHIRAPALLI KANJIKKOD KOCHI 5 mmtpa COIMBATORE TUTICORIN EWPL
- 17. Regasification Capacity 2013-14 2014-15 2015-16 2016-17 13th Plan 12.5 12.5 15 15 15 HLPL Hazira 5.0 5.0 7.50 10 10 Dabhol 1.2 1.2 5 5 5 Kochi 5 5 5 5 10 Ennore 0 0 5 5 5 Mundra 0 0 5 5 10 FSRU / East Coast - - - 5 15 23.3 23.3 42.5 50 70 88 88 153 180 252 LNG terminal Dahej Total Capacity (MMTPA) Total Capacity (MMSCMD) Sufficient Re-gas and Pipeline Capacity available to import LNG
- 19. Partnerships Avenues in Asia Partnerships LNG Vertical integration Potential outcomes ▪ Traditional : Greater stability & certainty ▪ HH Indexed : for demand in core sectors ▪ New Sources : for new markets (Africa) Cross-border pipelines ▪ Asian grid linking Central Asia, ME, India, SEA, China Downstream integration ▪ Downstream investments by suppliers in power, petchem Trading platforms ▪ ▪ Asian gas price index de-linked from crude Asian gas trading hub to enable greater liquidity Joint project development ▪ Cross-equity holdings in liquefaction and regas FLNG / FSRU ▪ Joint Participation in FLNG / FSRU Shale gas/CBM ▪ Unconventional production (esp. in China) Horizontal alliances Technology alliances Source: GAIL, McKinsey
- 20. Business Partnerships Cntd… • Joint acquisition of assets in Canada, Africa, Latin America etc. • Swapping of LNG volumes to reduce and optimise shipping costs • Knowledge sharing in areas related to CBM, Shale Gas, UCG projects, gas exploration, pipelines etc.
- 21. GAIL – The Partner of Choice • India’s Premier Integrated Natural Gas Company since 1984 • 57%+ Government of India stake • 17%+ CAGR in 10 Year Turnover, 9%+ CAGR in 10 Year PAT • Turnover of $8.6 billion and PAT of $731 million (2012-13) • Strong presence in International Sourcing & Gas Trading, Pipeline transmission, Petrochemicals, Liquid Hydrocarbons & Gas Processing, E&P, City Gas Distribution, LNG terminals • Global footprints in USA, Singapore, China, Myanmar, Egypt • ~4000 Manpower Asset • India’s No. 1 Gas Company
- 22. Conclusion Greater collaboration between all stake holders to unlock potential of LNG industry. Creating partnership between LNG Buyers/Suppliers in Asia on price and investment. Promote dialogue and consensus through an Asian Cooperation Forum Need to be flexible and explore new avenues that can create value. GAIL is a Preferred and Low-Risk Indian Partner for Investments in LNG Supply Chain Partnerships – The Prime Imperative
- 23. Thank You